Expensify's David Barrett on unconventional process

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Patrick Campbell

One size fits all. At least that's what mass commercialization after the 1950s wanted us to believe. But is it really true? Whether you're at Target, Wal-Mart or your local boutique, we've all been clothes shopping. And if you see something that fits your style, you've got to check and see if it actually fits your body. Excel in one place is a double excel in another, and a small in one place is an extra small in another place.

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Patrick Campbell

Come on. The changing room can be a humbling experience. And if you're like me or you're just in that post-holiday exercise hiatus, it'll reveal that Large is probably now a bit of a medium. And even if you do find an item in your size after a period of time, it might not really fit in stylistically. Now, this isn't necessarily a metaphor for B2B sass swag.

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Patrick Campbell

This is actually a metaphor for business operations. While Facebook ads might bring in 10% more leads for Company X, Company Y might try that and see an even smaller return than they had before. Additionally, that channel can wane if not tended to properly, and pretty soon Facebook ads aren't as viable as an option anymore. But it doesn't hurt to try.

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Patrick Campbell

And today's guest, Dave Barrett, the founder and CEO of Expensify, knows this better than most. He exemplifies this concept of challenging existing principles and also trying out new ways of thinking. Over his decade plus tenure leading Expensify. He has learned what attracts not only the best customers and where to focus on getting them, but he's also one of the deepest thinkers I have ever talked to.

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Patrick Campbell

When it comes to wisdom advice on how to build an actual business, all of those thoughts and more coming up next. From Paddle to Protect the Hustle. For we explore the truth behind the strategy and tactics of B2B SaaS growth to make you an outstanding operator. On today's episode, Dave Barrett dives deep on process. We talk about marketing effectively by being unconventional, the roadmap to companywide efficiency, obsessing over process of overcoming fears as an operator, and the two rules for disagreeable discussions.

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Patrick Campbell

After you finish the episode, check out the show notes for an in-depth field guide focused on what we went over well time.

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David Barrett

David, the founder and CEO of Expensify. And we do expense reports that don't suck. It's a bold vision, but we're making the world a better place. One expensive part of time.

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Patrick Campbell

Has been around for a while. I guess the product has been 13 years. Yeah. And so what's been what's been kind of like that development has has like the core of the products really changed or has it been, you know, maybe like we've refactor it, made it faster, that kind of thing. Like how do you think about the last 13 years basically?

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David Barrett

So first the opportunity is huge. Like every business in the world has an expense problem. Like not all have revenue. All of them have expenses, and it's roughly the same process regardless of the company size, different every currency and things like this. And so of the hundreds of million businesses in the world, like hundreds of millions of businesses in the world, every single one has this problem.

00;03;00;27 - 00;03;22;14

David Barrett

Virtually none use anything like every single customer of every one of our competitors. It's still like less than 1% of the opportunity size. And so I think that people get so obsessed with this idea of TAM and so forth, and they talk about like, you know, single digit millions, like, wow, it's big or whatever it is. But that's because we limit our imagination of what Tam is to that which can be acquired by a traditional acquisition model.

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David Barrett

And we've just all accepted almost as a given. It's not possible to acquire 99% of the world. We need to think about our point 1%, and that's our and that's success. And so I think that we've always, from the very start, modeled ourselves after, like, how do we acquire every business in the world? And that's just a different strategy than everyone else.

00;03;40;28 - 00;03;56;19

David Barrett

And so getting back to your question, I would say so we think the opportunity size is so huge. I think that the past 13 years has been about like, imagine it's kind of like a bubble or something like that. So we push in one direction for a while, then we come back and push in different direction so we can keep expanding our scope.

00;03;56;26 - 00;04;17;10

David Barrett

I didn't start off anything like no one does, but basically just like, you know, just to wear app for that can I claim can scan receipts Back when the cameras were so bad you literally couldn't read anything off of them. But it didn't matter because I was just like I was just selling the dream. And so there's and the first people who saw that dream were just individual, like salespeople at conferences and things like this.

00;04;17;23 - 00;04;32;06

David Barrett

And so initially it was all about like, hey, what does the individual employee want? What do they hate? Why do they hate concur so much? What do they hate about expense management so much? And then building something for them. And then once they had something, it's like, okay, it solves the dream for the employee. Now it's like, Well, now I need to get the admins on board.

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David Barrett

So it's like, okay, well, initially it was like small business and things like this, basically focusing on what is the small business customer need sort of thing. And then it went back to it's like, okay, now we need to deliver on the promise that we made to everyone and to go back to the, the end user experience. It's like, Oh, now we've got a thing with a thousand person company and then like we kind of go back to the end user a bit more and automate a bit more and kind of like move more word of mouth.

00;04;51;25 - 00;05;12;02

David Barrett

And now we're talking about a 10,000 person company. So it's like this pendulum swing back and forth between essentially consumer and enterprise. And we've been pushing in both directions ever since. And so now I think the pendulum is right now kind of like very much on consumer izing things, again, like refreshing for making it even slicker or even more automatic for the end user.

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David Barrett

Probably going to like swing back to the direction at some point. So it's just basically this pendulum swing back and forth between kind of consumer enterprise.

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Patrick Campbell

You mentioned concur. You know, obviously that's been around for a long time. What was the shift? Because obviously you guys have been successful. Was it the fact that there was more mobile going on? I mean, it was early, starting really early, or was it just that it was so bad because it was so enterprise that gave you a little bit of a wedge.

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Patrick Campbell

And I think.

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David Barrett

It comes down to your acquisition model. Like everything about us traces back to, we acquire customers in a completely different way, and that's because we're aiming for a very different market than most. Concur is not trying to capture 100% of businesses. They're trying to capture 0.1% of the world's businesses. What they would say are the best point 1%.

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David Barrett

But I think the fallacy of that is that everyone else with the same business model is going after that same point 1% of the opportunity, which means there's no longer the best point 1%. It's actually the worst point for them because everyone with the same enterprise acquisition model is buying ads in the same place with the same messages for the same price.

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David Barrett

They are feeding them into. A sales team, paid the same commission the same for of feature list. And it goes into like, you know, a product management team which is hired from the same places, builds the same products managed by the same customers. So everything about it is exactly the same and all of them are losing money. If you have an easy traditional acquisition model, odds are there's a dozen competitors who have the exact same model and they're employing it the exact same way.

00;06;34;17 - 00;06;51;24

David Barrett

All of them are venture funded. The VCs don't actually care about making a real product and so all of them are losing money literally their entire existence. At no point is anyone even trying to make a real business. And so as a result, none of them are actually real businesses. None of them have ever returned to like a dollar of profits because it's basically impossible.

00;06;51;24 - 00;07;09;12

David Barrett

And all of our competition's been acquired and exited before making a dollar profit. And but that was their design, too. It wasn't even like an accident that that was their plan. And they and it's easy to make a small amount of money, and most people do. We're trying to make an absolutely giant amount of money. And that's hard and it's a different strategy.

00;07;09;15 - 00;07;28;22

David Barrett

And so I would say the difference is first, we're just aiming for a different goals and they are a much bigger pie than they're trying to get. And then secondarily, our model couldn't have worked prior to the mobile app stores, so we were the first country putting out the first app, promoting receipt, scanning before the cameras even worked, and then before the app stores even existed.

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David Barrett

And then we got a name for like, Oh, Spotify is that app which you can't install because no app stores the skins receipts, which doesn't work as a camera phone, and then suddenly we got the next version of iPhone, got an autofocus camera and opened up the App Store. And so we just happened to be first in line for this thing.

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David Barrett

And then that just propelled us that pretty good word of mouth. So it's not like our model could have even worked before we came out.

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Patrick Campbell

Sure. And when you look at, you know, that TAM analysis, I think is actually a really interesting point because everyone's going for the point one, like you said, it like it gets really funky. I think for you guys, though, it's a lot of fronts, right? You know, when you're going in the middle and then going out and, you know, Yes.

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Patrick Campbell

Being the first and the App store and stuff, I'm sure help. But there's plenty of people who are also first that are no longer around. And so what do you think was the thing that, like, helped you fight those fronts, whether it was new features, whether it was like going up and down, like you said, and kind of going out in the sense of like getting so many different types of companies off of, you know, spreadsheets and things like that.

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David Barrett

I think it was an early focus on unit economics and not like the calc LTV and everyone's out there like that first. I've just never seen the business work it out like literally none. I just don't believe that there's any business out there that has a statistically relevant fact LTV ratio that actually describes the majority of the revenue they acquire.

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David Barrett

Just like I know that everyone has a hack and LCD that acquires some of the revenue they acquire. But like I remember I was talking with, I don't know, some of that like box that like box on that back in the day and they're like and they were like legendary for having a highly sophisticated customer acquisition. Pipeline finished a lot of money.

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David Barrett

I was talking to this guy how quantified they are and things like this and I'm like almost looks as an afterthought. I'm shocked for an hour like, Hey, what fraction of your revenue can be traced back to your customer? And your paid customer acquisition is like, oh, you know, maybe 30% and that's like a soft 30. And I think that's probably true for most business since they're like, yes, there is a portion that can be quantified and everyone obsesses over that.

00;09;24;24 - 00;09;45;26

David Barrett

But it's also largely an irrelevant portion. The overwhelming majority of I think nearly every business I've ever heard of actually comes from like word of mouth, brand income and things like this. But people just don't talk about it because it's just it's so hard to quantify it. We just like, act like it doesn't exist. Like I was talking with like early Salesforce folks, I love their names, but it is it's like and it's like, come up.

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David Barrett

Everyone thinks of like the predictable revenue model, the Salesforce model. It's like, Yeah, we didn't do any of that. Start like that work later when we're going after a larger deal sizes and things like this and we had a brand and a bunch of other things, but that was actually not at all how we started.

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Patrick Campbell

When you say unit economics, then what are you thinking about? What are you looking at?

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David Barrett

How much do you spend your customers? And I think the ideal is zero. So we built a product first business model that has zero marginal cost to customer acquisition like everyone else is paying through the nose for leads. We're like overwhelmed with leads because we had like we built a viral model from the very first day and continuously reinvested back into it.

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David Barrett

It takes a long time. Like exponential growth is fast and the end, it starts off slow. So you go from like, you know, $10 a month to $11 a month. It's like that seems so small when you're going from like, you know, when the numbers, the zeros at the end of it, 10% is actually gigantic. And if you can just keep that going for a very long time, it's amazing.

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Patrick Campbell

So you were like the original OG of product led growth or whatever their call, I guess.

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David Barrett

Yeah. I mean, I God, I think Dropbox probably earns that title more than anyone, but only for consumers.

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Patrick Campbell

Because now I'm kind of like thinking back, do you do any advertising? Because I'm like, I can't. I can't think of of I've seen it, but funny enough.

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David Barrett

So we didn't do any advertising until our Super Bowl ad. We dabbled with it enough to realize this doesn't work at all. Like literally at all and everyone else. It's because at a certain scale, it's just like it's immeasurable. And so but we're like, so far as we can say, most people say like, Oh, it's too small. We need to go bigger in order to prove it.

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David Barrett

And I still can't see any results go big. Bigger, Yeah. And then they'll go. Their entire career, never saw.

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Patrick Campbell

Results and then went to the biggest. Yeah, yeah, yeah.

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David Barrett

So anyway, we start a similar but not even to acquire customers. It was all about team building. Like we were a little bit profitable and there was like a vibe in the team. Like cool, we did it like, you know, now we're just going to coast off to the sunset and I'm like, No, man. I was like, Let's let's get everyone thinking so much bigger on a bigger scale.

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David Barrett

And I was like, Are you kidding me? Like, we don't we don't advertise. I'm like, Well, we're going to now. But I'm like, Well, that doesn't make sense. Like someone going to do when they see the ad. We don't really have much consumer functionality. It's like, we'll be better at it then, right? Like, okay, I guess. And then like push the pendulum back to consumer for a while and it's like, Well then how is it even going to how are we going to afford this?

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David Barrett

I guess like we were only barely profits. No, we can afford that. I'm like, Well, what if we double prices on our customers? And they're like, Well, that's that's crazy. I'm like, Well, so long as we lose less than half of them, it works out right now. Like, I guess. And then but then we didn't lose any of them because actually we're priced so cheap even now.

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David Barrett

So we cut all our customers, doubled all of our revenue and turn a profit.

00;12;21;15 - 00;12;23;05

Patrick Campbell

Was this the 1 to $2 change?

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David Barrett

Each time we've adjusted our pricing, we've actually kept or lowered prices on the list, but then made some other change that results in double pricing and like all sorts of like pricing trickery, which basically has been about like really keeping in touch with the value you're delivering if you're delivering it to relative to the price. And I think we hear all the time, it's like, oh, I couldn't live without like Salesforce and Expensify.

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David Barrett

I'm like, Salesforce is $90 for minimum.

00;12;49;01 - 00;12;51;13

Patrick Campbell

And you don't even get what you need until you're at 130.

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David Barrett

Exactly. And so I'm like, So I feel like we've got a ten x buffer between us and actually like what we call the Super.

00;12;57;04 - 00;13;08;05

Patrick Campbell

Bowl ad for team building. You're clearly a founders. Founders. That's like, that's definitely like, yeah, that's why we did it. And you're like, That makes no sense. But it makes sense from like a founders perspective. Like, it's so good.

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David Barrett

Yeah, I mean, it already paid for itself in increased profit before we aired it.

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Patrick Campbell

Do ads work anywhere like is it or is it just more the, like, crazy venture e too much venture?

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David Barrett

Here's our theory around it. I think that I don't I do not think ads produce a positive ROI when you're measuring it from like a new customer acquisition perspective. Got it. The more measurable it is, the lower the R one. And so the places where the most measurable everyone else is doing the exact same thing, they're willing to lose money on it.

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David Barrett

So like it drives it negative r y everywhere. So it's more.

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Patrick Campbell

Of a brand place. Yeah, but.

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David Barrett

I think brain advertising can be very positive. R y But you just can't really measure. Yeah. And so we take a different approach towards a what we call a market consensus strategy where rather than trying to calculate the r y of any ads, we instead survey different markets to make sure that people view us more favorably than all of our competition interest.

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David Barrett

And then we know that we will capture the lion's share of word of mouth just by automatically. And so we calibrate our marketing spend based upon creating basically energizing word of mouth, but it's not based upon sort of like the specific r y or cost of like character LTV ratio or anything like that. And that's relatively new. Like we actually start we haven't done any advertising for 11 or 12 of the 13 years of existence you.

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Patrick Campbell

Are those just don't know, like what kind of ads are those video ads Like, like, how do you energize the base? I guess how are you thinking about.

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David Barrett

I would say we find like outdoor. So we go to places where no one else does because again, it's like we think the highest return is going to be in the places that are at least measurable and sort of like bus ads, you know, bus shelters, like, you know, things like that.

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Patrick Campbell

That's cool. I have an interesting model to share with you because we're doing something similar with this thing. I do have to give you major props. You wrote this article, this blog post. When you raise your price from 1 to $2, I think it's maybe a decade ago at this point. It's been a long time since you wrote this article.

00;14;50;10 - 00;15;07;20

Patrick Campbell

One. I think it was a we use this as an example because we use we have price optimization software and we help other companies with pricing and stuff. We use this as a really good banner example of like how to communicate the pricing change to someone because you were really empathetic and you were like, Yeah, listen, you know, this is this is like 1 to 2.

00;15;07;20 - 00;15;27;23

Patrick Campbell

We haven't raised our prices, we've had all this functionality, etc. by a lot. But the most brilliant thing you did, and I don't know how intentional it was you put P.S. If this materially impacts your business or you phrase it somewhat like that, let us know and we'll work something out or something like that. And we've seen this now in practice time and time again, that that piece is the amazing thing.

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Patrick Campbell

And I just, I just want to give you props because it is for two types of people. It's for people who are like it actually impacts them. And I remember reading the comments on that blog post and it was like, yeah, it's you know, I know it's only one or $2, about 100% increase or something like that, like in which, you know, it's always someone complains.

00;15;43;09 - 00;15;55;19

Patrick Campbell

So it deals for the people who actually are hurting, but it also deals for the people who are probably like at least like me or like you were on a panel and like, you never want to pay more for something. But if someone says that, you're like, I don't want to be that sure. Everything right? So it was brilliant.

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Patrick Campbell

And I don't know if you did it intentionally, but like, I just want to let you know I've stolen it's times now.

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David Barrett

I honestly have forgotten all about that. I should do it again.

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Patrick Campbell

You're just already, like, an empathetic founder, You know that. That you know, isn't afraid to have opinions. So it's one of those things I think is powerful when you're swinging that pendulum. How fast is that swing? Hmm.

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David Barrett

I was in a period of it's like two years.

00;16;15;09 - 00;16;24;13

Patrick Campbell

Okay? Because I'm thinking like a team that has to go up or down, like a product team even just has to, like, kind of rejigger things, even if you have multiple product teams kind of saying.

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David Barrett

Well, we only so we only have one team. And what I mean by that is like, so we talked about expensive as a very flat company. And what I think flat means is it has no thick, juicy center. Everyone has at least one foot in the real world. We have no product managers like there is no one whose job is like just to think real hard, like everyone is either talking to customers, writing the code, talking to investors, like everyone is doing something outward facing, so everyone has their own personal real world experience.

00;16;51;08 - 00;17;07;29

David Barrett

And so, for example, our customer success team is the closest we have to a product management team. Our customer success team spends roughly about 30% of their time talking to customers, and the other 70 basically are like writing product specs, fixing bugs, testing things. And so that's one reason why the product is so in tune with the customer's needs.

00;17;07;29 - 00;17;38;10

David Barrett

Just because we don't have someone that's just like talking to the customer success team in order to figure out what the challenges are. And then like there's a telephone game of our requirements. It's like the actual customer testing works directly with the engineers writing the code and then they fix it. And so that means that we can be extremely agile because there's not a long sort of like gap between basically when we learn information, when we apply it, it's basically if that cycle is very quickly, you can turn that you reprioritize, reprioritizing a dime.

00;17;38;10 - 00;17;41;23

Patrick Campbell

So is there any like road mapping then, or how does that work?

00;17;41;24 - 00;17;56;14

David Barrett

Is very fuzzy. We don't have any sort of like real formal roadmap. In fact, when you work at Expensify, we say it's like, I mean, we're very clear on this. It's like you don't report to anyone. You have no boss do literally whatever you think is the best thing for you to do. You know your skills, betters anyone else.

00;17;56;14 - 00;18;11;11

David Barrett

Too much is going on for anybody to keep track of it all. So no one knows a better use of your time than you do. You can write any design. Die for anything is like do whatever literally anything you want to do. However we do it. There's two caveats to that. One is you have to follow the same process as everyone else.

00;18;11;11 - 00;18;34;29

David Barrett

In that process is designed to slow down and broadcast our thinking. So you can say do whatever you want, but you need to first go into like our slack that we get a slack from called What's next in the slack room and write one paragraph description. And what do you think the problem is you're trying to solve what is a one paragraph high level solution and then let that sit for a day and people are going to chime in like, I don't think that's a real problem or it's not quite right or something like that.

00;18;34;29 - 00;18;52;26

David Barrett

So solutions like off think of this, then you have to go to a design doc and like and you know, and you have to take the feedback. You don't have to do anything with it. You just have to hear it and give everyone a heads up of what you're going to do. Then we go to a design doc, which is like a more detailed sort of thing at that site because some review again ignore all the feedback, that's fine, but you have to hear it.

00;18;53;09 - 00;19;10;18

David Barrett

All of this are designed to slow things down such that you can have a more inclusive environment for people, especially for different time zones to participate. And so this whole process basically allows engages everyone in the product management perspective. The roadmap is just kind of like a loose consensus of where we're going, but there's no one's required to follow it.

00;19;10;18 - 00;19;25;28

David Barrett

Like you can just do whatever you want. The other caveat is do whatever you want, but your compensation is determined by your peers. Again, there's no managers, so there's no one there to get. Like you can't ask for a raise because who would you ask it to? Instead? The way it works is twice a year. I mean, there's internal tools to support it.

00;19;25;28 - 00;19;42;11

David Barrett

Everyone votes on the compensation. We have a tool as brings up to random employees like Alison, but show them side by side. It's like, again, there's no teams. So it's like, here's how many conversations they've closed with customers, here's how many GitHub contributions they've done, here's how many like sales calls have done or whatever it is. Here they are side by side.

00;19;42;11 - 00;19;56;16

David Barrett

And then here's like a Twitter like blurb that they have of like what they've done in the past quarter and the past half year. And then the question at the top is who do you think should be paid more left or right as like Alice or Bob or Kathy do that about 9000 times. You've ranked every pairwise combination in the company.

00;19;56;25 - 00;20;11;25

David Barrett

Everyone in the company does the same thing. And so then we take all that we've collapsed all the data, we normalize it, and that just spits out a formula. Okay. Says, you know, compensation according to the collective wisdom of the entire company. And it's wild and it works great because it's so much more nuanced than any manager could possibly be.

00;20;12;05 - 00;20;12;27

David Barrett

It's impossible to.

00;20;12;27 - 00;20;14;29

Patrick Campbell

Jane, how many abs do I answer?

00;20;15;00 - 00;20;25;21

David Barrett

I think like the last time around was like 9200. So as 9200. But you can optimize that down because, you know, you can say if A is greater than B and B is great to see, then you know that is going to be.

00;20;25;29 - 00;20;27;09

Patrick Campbell

How many do I personally click.

00;20;27;10 - 00;20;30;19

David Barrett

You probably had to do like a 2000 or something like that. It takes like personally.

00;20;30;19 - 00;20;30;29

Patrick Campbell

Like takes.

00;20;31;05 - 00;20;39;08

David Barrett

It takes about 10 hours. Yeah, we only have 140 people and it's fine. Actually, you don't have to stress out too much about it. Like, Yeah, well, any individual decisions like not that influence. Yeah, because.

00;20;39;08 - 00;20;40;07

Patrick Campbell

There's a lot going on so like.

00;20;40;13 - 00;20;49;00

David Barrett

It but you bring the insight where you can and then you basically just go on. It's like I only know the like my instinct is it sounds like that's good. That's still data like I'll.

00;20;49;03 - 00;20;54;28

Patrick Campbell

You Yeah yeah yeah Is this no managers decide what to do it sounds like that's more than just engineers of sales as.

00;20;55;10 - 00;21;09;25

David Barrett

A whole company. Again, we don't have any defined teams in the sense that like we have a bunch of different job posts just because people self-identify in different ways. But once you're in, it's this one room. It's like, Oh, cool. You interviewed for being a mobile engineer. You want a little don't care. Now I want to go to marketing when I work at a nonprofit.

00;21;09;25 - 00;21;10;04

David Barrett

Great.

00;21;10;12 - 00;21;24;07

Patrick Campbell

That's awesome. The case against this, I guess, is speed, right? Like, that's the theory. I'm not saying that's true, but I'm like, is it? So why are more companies doing at least like, you know, not necessarily the new managers part, but like the whole like work on what you think is best Because intuitively it makes the most sense.

00;21;24;07 - 00;21;34;08

Patrick Campbell

And especially if you have those feedback cycles, like if you let everyone know what's going on and I disagree with you, that gives me the forum to like work with you until I convince you, right? Or you convince me and that type of thing which.

00;21;34;09 - 00;21;38;00

David Barrett

You or one person just goes ahead and it either works or fails. And then reality tells us.

00;21;38;09 - 00;22;03;10

Patrick Campbell

You know, it's funny, though. It's like a much more elegant way to do it, because we you know, we have this kind of in theory, we you know, we have managers and we have some decision points stuff like that. But it's very much like, you know, we have a very feedback driven culture and stuff like that. And then what ended up happening is, you know, you have those conversations, but this is a very elegant way because it puts pure transparency as well as like, you know, letting the debate or the feedback kind of happen and then kind of falling on the merits, I guess, like why why do you think more companies don't do this?

00;22;03;14 - 00;22;21;00

David Barrett

Because it take an average group of like a random hundred people and it would fail utterly. We're very, very selective. Like Expensify is the best place in the world for a very tiny group of people. And most people, it just wouldn't work in this environment because I think to work in this environment, you have to have like three core qualities.

00;22;21;00 - 00;22;34;29

David Barrett

I would say. One is that you have to have a raw, natural talent, which we define as the ability to learn without being taught and teach, which, you know, that's important because again, there's no one here to hold your hand. There's no one here to spoon feed you work and things like this. And so you have to be kind of an autodidact.

00;22;34;29 - 00;22;52;29

David Barrett

So like, it just doesn't work otherwise. Second, you have to be ambitious and like, meaning have some actual genuine goal for your personal life and some evidence that you're pursuing it. Because if you don't have ambition, you're not going to step up and find opportunities. You know what? You're going to sit around and wait for someone to tell you what to do, and there's just no one here to tell you to do.

00;22;52;29 - 00;23;06;22

David Barrett

And the third and the most important of those is that you have to have a real deep humility. You have to have an appreciation and an excitement for other people's ideas and like an enthusiasm to be wrong. Any one of these three is hard to find. Getting all three in the same person is super hard to find. How are.

00;23;06;22 - 00;23;09;07

Patrick Campbell

You screening like, What's your what's your recruiting process.

00;23;09;07 - 00;23;21;16

David Barrett

Like? Yeah, we've put a ton of time into hiring and we hire very few people. We don't look at resumes. We ask for as much as we just say, Answer these three essay questions. What do you want to do with the rest of your life, and how can I sense my help? When did you start doing whatever it is you do and why?

00;23;22;06 - 00;23;40;10

David Barrett

And how did you learn about Expensify? And based upon that, then we decide whether or not to basically do a remote challenge through. My challenge depends upon the role. There's several different ways to get in there, and then each of us has a different kind of interview process. So like if you're engineering or something like that, we'll do like a remote programing challenge, which basically is just like, Can you do anything from scratch?

00;23;40;17 - 00;24;00;26

David Barrett

Like everyone can like, you know, add a feature to an existing code base is like, can you start something from scratch that does the most basic stuff? If you get through that, then we take you into an onsite challenge. We run you through a bunch of like real world stuff after each challenge and we do it in front of the whole company so everyone in the company can tune in and we all talk about the candidate and say like, What do we like but didn't like?

00;24;00;26 - 00;24;18;08

David Barrett

How do we adjust the next thing? What are the red flags? We have things like this. Should we continue or not? We're very aggressive on cutting quickly, so like we'll cut after the first challenge if necessary. Let me go back and forth. So each time we kind of reiterate this at the end, if you make it through this whole process, then you talk to me and then the only question I ask is the same question.

00;24;18;08 - 00;24;36;22

David Barrett

The first question, what do you want to do with the rest of your life and how can make sense of I help the overwhelming majority of people have the exact same answer. So end is always a failing answer. The failing answer always sounds the same. The passing answer is always on radically difference and the filling answer is always some form of like, you know, I want to learn to solve hard problems.

00;24;37;09 - 00;24;42;10

David Barrett

I really want to like, you know, be challenged and valued. I want to maybe someday start a.

00;24;42;10 - 00;24;43;25

Patrick Campbell

Company like a generic corporate answer.

00;24;43;25 - 00;24;56;27

David Barrett

I'm like, cool. But that's that's is a series of actions you want to take. Like, what are the actual what's the consequence of those actions? And so then I ask it again, you're on your deathbed. You're looking back over your life story about your friends and family. Like, what do you want to say is your greatest achievements, your greatest accomplishment?

00;24;57;09 - 00;25;12;05

David Barrett

Again, all the feeling is just the same. I want to know that I tried my best, that I really, you know, contribute to the people around me, that I start a family and I. Cool is human condition. Yeah. This is literally 100% of humanity would agree with that. Like this is I'm testing for ambition here and there's nothing.

00;25;12;17 - 00;25;21;26

David Barrett

And then the third one would be like, get a million, $1,000,000,000 your bank account, what would you do with it? And most people was like, well, you know, I would donate a lot and you can't even spend your own money.

00;25;21;26 - 00;25;23;07

Patrick Campbell

Yeah, that's interesting.

00;25;23;17 - 00;25;30;21

David Barrett

One guy said, Oh, you know, I give my brother a laptop. I'm like, I would hope so. And so anyway.

00;25;30;21 - 00;25;36;16

Patrick Campbell

Is a passing answer, like I want to do. Like I want to take this and this and like, is it just the specificity.

00;25;36;16 - 00;25;52;00

David Barrett

Just anything specific to them? And then I'll push them. So it's a it's an open mic test. It's like, that's why I like it. Like everyone can know the failing answer, but it's hard to come up with a real passing answer. And I want people to think about it and come in the business like I. I want to do literally anything with my life that is unique.

00;25;52;06 - 00;25;55;03

David Barrett

And I turn away a ton of candidates that way.

00;25;55;10 - 00;26;00;18

Patrick Campbell

That's fascinating. It's so interesting. So you're testing for ambition there. That's the purpose of. Yeah.

00;26;00;18 - 00;26;09;06

David Barrett

And so most of our interview process is testing for talent. My job in the interview process is test for ambition, humility. We can't test for that just reveals itself over time.

00;26;09;16 - 00;26;14;24

Patrick Campbell

And is it something where, like once you're in, especially with the salary structure, like what does firing look like?

00;26;14;27 - 00;26;22;11

David Barrett

Firing means like you've dropped in your rank substantially over time as basically it's like we can bring you in, we kind of slot you in really, we think you're going to get ranked.

00;26;22;11 - 00;26;24;22

Patrick Campbell

This is amongst the 140 from like a salary perspective.

00;26;24;29 - 00;26;39;12

David Barrett

It's like if you just keep dropping over time, like your metrics are like in the lowest decile of something like that. And then most them start off and it's like, Hey, well, you know, first our our assumption is as like you need some kind of support that you're not getting. Like, we know you're, we think you're awesome, otherwise we wouldn't have made you through.

00;26;39;12 - 00;26;39;18

Patrick Campbell

Yeah.

00;26;39;27 - 00;26;54;04

David Barrett

And so like, what do you need that you're not getting? And so let's try to, like, you know, help you with that. And we have a whole process in place that's designed to kind of like bring in resources to help people succeed and also to clarify, like, look, this might not be the right fit. Like, look, anyone who works at this one so I can get a job anywhere.

00;26;54;04 - 00;27;01;10

David Barrett

And so it's like, cool, maybe you should go someplace else, like Google or Facebook or anyone else who does hire whoever. Like you can definitely get a job there.

00;27;01;11 - 00;27;12;04

Patrick Campbell

Aggressive way to put it. But yeah, I like that. I like that. When we talk about tax engineers and stuff, you're literally just be like, We don't want to hire you unless you're ten x, Is that the idea? And then therefore we're able to have a lockdown with not a lot of people.

00;27;12;04 - 00;27;32;10

David Barrett

Yeah, because like A10x engineer isn't an X because they type ten times faster. Instead they make ten X fewer mistakes. So they just do ten x less. And so I think that's like if you have a group of people that just makes good decisions methodically, consistently, it's not like they're ten X in every situation. I think they can be ten if given, if put into the right context.

00;27;32;16 - 00;27;36;27

David Barrett

And so I think we find people and we give them an environment which enables them to be.

00;27;37;05 - 00;27;39;17

Patrick Campbell

As in context. Yeah, yeah. Was it always like this?

00;27;39;22 - 00;27;56;04

David Barrett

It's it sounds so obvious, but I'd say from the first start I'm like, You know what? I want to build a company that I never want to leave. Whenever we started doing something that I just that like no one likes is like, what? So why are we doing this thing that no, that no one likes? Well, you know, we have to.

00;27;56;04 - 00;27;57;15

David Barrett

I'm like, well, I do y.

00;27;57;18 - 00;27;57;23

Patrick Campbell

Y.

00;27;57;24 - 00;28;10;03

David Barrett

Y specifically. It's like, well, you know, you have to come sit with managers. I'm like, Well, what if we didn't? What is there an alternative that we would like better was like, Well, it'd be great if we could live up to that. I'm like, Okay, how exactly do you look? Yeah, like, well, you can do that. Like, I'll try it.

00;28;10;04 - 00;28;10;24

David Barrett

See, we think.

00;28;10;25 - 00;28;15;10

Patrick Campbell

You've had investors or have investors. Like what's there's got to be pushback on this. No.

00;28;15;11 - 00;28;22;27

David Barrett

Yeah, I think I mean, having results makes everything easy and and it didn't deliver I mean like then Yeah then sure we wouldn't sit there like whatever.

00;28;22;27 - 00;28;24;20

Patrick Campbell

Keep going. I suggest this other.

00;28;24;20 - 00;28;28;28

David Barrett

Yeah, sure. Yeah. I think everyone's creeped out to like what is going on.

00;28;29;01 - 00;28;29;27

Patrick Campbell

I'm fascinated.

00;28;29;27 - 00;28;43;13

David Barrett

Yeah. I was somewhere between fascinated, creeped out, like, you know, and like I'm. The results are great, so keep doing it. I guess. But, like, are you sure it's going to scale? And everyone's like, you know, this is going to work now at ten or 20 or 50 or.

00;28;43;14 - 00;28;45;14

Patrick Campbell

One on 1000 and like.

00;28;45;14 - 00;28;57;08

David Barrett

I don't know. Well, if so, we'll change. Like, I don't know. I again, the company we are right now is not the company. We were only ten people. We're so much better at everything. And so I'm sure when we're like 200 or 500, like we will be better to.

00;29;02;13 - 00;29;17;08

Patrick Campbell

You know, it's kind of funny when you you break it down sometimes in a false sense of security of the numbers. You say, Oh, I need this many people because I want more of these numbers. Right. It sounds like for you, it's like, how do you it basically the question is, how do you determine how many people you can hire next year or anything like that?

00;29;17;08 - 00;29;34;06

David Barrett

I think that there's like the Silicon Valley concept that like hiring is like basketball. Like the more people, the better. We feel more like golf. It's like you want the fewest possible people to get the job done because a person is a solution to a problem. And so the best is you don't have a problem. No, no, no need to hire.

00;29;34;23 - 00;29;48;01

David Barrett

Next best is you automate away the problem. As I cool like the robots can do it. Next is you can outsource the solution to the problem and then only after you've tried and failed and all of that do you say, okay, I guess we should hire.

00;29;48;01 - 00;29;51;12

Patrick Campbell

Do your sales folks have like variable comp?

00;29;51;12 - 00;29;52;28

David Barrett

No, everyone has everyone's compensated.

00;29;53;05 - 00;29;54;04

Patrick Campbell

Based on their model, you.

00;29;54;04 - 00;30;08;21

David Barrett

Said, and that's why we don't do any sort of commission sales. And I'd say like we're not really a sales driven organization. Everything is self-service. So like, there's there's no need to talk to a salesperson. There's no like benefit for doing so because you can't renegotiate anyway. It's just basically like we have a list price it's available to.

00;30;08;21 - 00;30;15;29

David Barrett

Everyone is self-service. It's very easy and we have an amazing support team that responds to like via chat instantly. So like everything.

00;30;16;11 - 00;30;27;13

Patrick Campbell

Is that cause problems like where people I mean, I guess it's so many permutations that you kind of like the wisdom of the crowd is truly represented and so you don't feel like there's anything fishy with the calculation, But is it?

00;30;27;13 - 00;30;45;25

David Barrett

Yeah, I think people I mean, well, first I think we just we compensate incredibly well because everyone we have is insanely talented. And furthermore, we pay the same wage regardless of where you are in the world. If you live in San Francisco, you're like, you're very comfortable. If you're living literally anywhere else in the world, you are, you are extremely comfortable and no one has the kind of flexibility in life.

00;30;45;25 - 00;30;55;25

David Barrett

So it sounds like super well compensated. We are very aggressive when it comes to equity. And so we encourage everybody to get equity and we are like super flexible, like work and anything you want. As long as you want.

00;30;55;29 - 00;30;58;25

Patrick Campbell

Is there ever like a salesperson who wants to work on like engineering or something.

00;30;58;25 - 00;31;04;19

David Barrett

All the time and yeah, like, yeah, again, there is no individual person that fits like exclusively in the one role.

00;31;04;19 - 00;31;12;06

Patrick Campbell

That's interesting and you just sound like the person who's never had a problem with like, Oh, I'm worried about the lack of control or we're not going to hit this target or something like I.

00;31;12;06 - 00;31;14;19

David Barrett

Feel like. So first that implies that you have targets.

00;31;14;25 - 00;31;22;18

Patrick Campbell

It's a different paradigm. You know, we hear all these talks and stuff, there's all these paradigms and you're just like, Why? You know, why not this way? But I guess it's just like.

00;31;22;18 - 00;31;40;23

David Barrett

Yeah, yeah. I mean, like, I would say like most companies are looking for predictable growth, but I think the only way it's just like people are like looking ahead deadlines and I think both of them only the only way you can consistently had a deadline is to pad your deadlines and then you just delay. And the only way you can consistently growth numbers is to shrink your targets and then hit lower numbers.

00;31;40;23 - 00;31;55;26

David Barrett

I would say it's like, no, I have no idea how long this is going to take. Instead of it's going to be confident that we're following the right process. And if it takes a day or a month or a year, that's just how long it took. And so I have no idea how much money we can make. I have no idea how profitable we can be, but let's just be more and less as we're looking for ways to be more.

00;31;56;04 - 00;32;04;15

David Barrett

And I think in the end it adds up to gets done much faster than anyone would have predicted. And we hit much higher numbers than anyone would have set targets for.

00;32;04;16 - 00;32;10;07

Patrick Campbell

Is there ever a moment where you've like second guessed some of these like structures, I guess to call them?

00;32;10;07 - 00;32;15;06

David Barrett

I mean, yeah, but there are there are designs to evolve, like they've evolved heavily constantly. So we're always second guessing what's.

00;32;15;07 - 00;32;19;10

Patrick Campbell

Something that like evolved from beginning till now on this, on these axes.

00;32;19;19 - 00;32;30;06

David Barrett

Well, let's say like our compensation. So now it's based on voting. Initially it was just me and my co-founder. Just paying our sales values passes anything. But then like then it was like a small group of people that would sit down and talk about.

00;32;30;06 - 00;32;30;18

Patrick Campbell

Committee.

00;32;31;04 - 00;32;48;24

David Barrett

Committee. And then it kind of grew from there. Then it became like a committee leading a group and then became like open voting. And now it is all algorithmic. And so I would say the evolution has always been getting closer to our ideals. And I'd say if we've ever second guessed that something, it's because we doubted ourselves. We tried something, and I'm like, We should just stick to our guns.

00;32;48;28 - 00;32;51;25

David Barrett

And so over time, we've just gotten more and more pure to the idea.

00;32;51;27 - 00;33;03;23

Patrick Campbell

Just based on this filtering, you're hiring a rather mature and that's not an age thing, but a mature team. Therefore, if there is something that goes wrong, you adjust basically. Or is that. No, No, I don't think so.

00;33;03;23 - 00;33;20;13

David Barrett

Like I would say so. We've incredibly high retention, like our average like Silicon Valley is like one and a half, two years, like we're like average six. The management teams are going like, great, but we hire mostly right out of school, like we're often if someone's first job. And so I would say they're mature, sort of like emotionally perhaps.

00;33;20;15 - 00;33;32;12

David Barrett

Yeah. And like notably absent from our requirements is any kind of experience. Like we don't care if or where you went to school. Kerry You work. It's like experience as means you'd like you didn't get fired. It just happens as the exhaustion.

00;33;32;12 - 00;33;38;04

Patrick Campbell

Oh, totally. I meant more from the fact of like a less emotionally mature person. And it's not an age thing. Like, Yeah.

00;33;38;04 - 00;33;38;16

David Barrett

Yeah, yeah.

00;33;38;20 - 00;33;55;07

Patrick Campbell

It's much more of like, a less emotionally mature person if you do something. Because some of the things you're doing are relative to the rest of the world, a little dramatic like, you know, rather corporate world. And so it's one of those things where it's like you mess up, you have a mature base that is like, okay, let's try the next thing or let's evolve from there.

00;33;55;07 - 00;34;17;24

David Barrett

And I think when you have super high retention like we do, we have a very strong institutional knowledge and then it's like people have been around, they're in their lives, are comfortable, they've got good work life balance they're able to pursue. They're inspired at work, like we take the whole company for overseas for a month with families and kids just like to bring everyone together and give people experiences so much bigger than they can imagine for themselves.

00;34;18;03 - 00;34;27;27

David Barrett

And so it's just it's a whole package. It's not like we missed a deadline. It's visa like that took longer than expected. Things went from astronomically amazing to only like a super amazing.

00;34;27;27 - 00;34;28;22

Patrick Campbell

So so just the.

00;34;29;02 - 00;34;29;21

David Barrett

It was like whatever.

00;34;34;23 - 00;34;56;23

Patrick Campbell

It's interesting because you're making them like realize that I think a lot of decisions are in a fear like. I fear I'm going to miss this more people means it'll work better, like fear. I'm going to like not be able to build this quick enough. Let's hire more engineers. I don't know if that's actually that's intuitive, but if that is intuitive, this is counterintuitive of like, hey, a really good like incredibly high bar people.

00;34;56;29 - 00;35;10;01

Patrick Campbell

You don't need as many. You pay them really, really well because you don't have like a bazillion of them that you need to kind of like spread the peanut butter on. Do you just not have fear? Like, is that like, like you don't how do you not have the founder paranoia where you're, like, worried about at least things?

00;35;10;02 - 00;35;34;11

David Barrett

I mean, I would say but my I probably have a kind of a different set of fears. Like I think most people are afraid of not being on the closer next round. That's what drives everything. And that is an existential fear because. They're like, basically, at any point in time, I'm within 12 months of losing everything. And so that is a very deep paranoia that drives basically like I have to do not what my current investors want, what we all think our next investor wants.

00;35;35;01 - 00;35;54;10

David Barrett

And I don't even know who that person is. So basically, like my entire life is in the hands of someone I've never met, whereas we're like, Nope, we just got profitable. And so now we never give up more than half of the board. And so it's like we can't be fired. And so we are accountable to our, you know, tens of thousands of customers and are millions of users.

00;35;54;28 - 00;36;10;27

David Barrett

And so our fear is, are we doing right by our customers and users? And that's hard. Like That's a different set of fears to say is like, how are we always making sure that we're like, we're cutting edge, we're delivering, we're keeping up and like making good on our promises and things like this. But that's a preferable set of fears.

00;36;10;27 - 00;36;13;21

David Barrett

So it's not that I have no fears is I just I have the same fears of other folks. Yeah, it's.

00;36;13;21 - 00;36;25;16

Patrick Campbell

A different type of it. You know, everyone's got some fear, right? But yeah, it's a different you blow my mind to. So, you know like and that's good. Like normally I hear like, oh let's set up our sales strategy and it's like, oh that's interesting. Yeah. But now it's like.

00;36;25;24 - 00;36;43;00

David Barrett

Say, well all in all, this is not just to be sort of like iconoclastic for its own purpose. It's all in support of, as I said from the start, we're going after a giant opportunity. And so we need to have something that can scale two billions of users. It's it's almost like eye rolling to even talk about that scale.

00;36;43;06 - 00;36;56;24

David Barrett

And we know it's possible, but going to be like, no, no, no, that's just Google does that, you know, like you could never do that. But like and so we're like, I don't know. I literally don't know what we can do. And so let's find out. Like Intel, we know that we can't scale to billions of users. Let's just keep going.

00;36;56;24 - 00;37;12;20

David Barrett

And so what would it take while you need to have a team that has high retention that you can scale nicely, that's like cost effective. You need to be profitable. You need to have systems that can like doing them like, you know, millions of customers. Who's going to close them, millions of sales people. Like, no, that's not going to work.

00;37;12;20 - 00;37;32;09

David Barrett

It's got to be self-service, it's got to be freemium like this. You know, there's no point in perfecting like, you know, I think a lot of company has to get trapped in local maximum. So like, oh, you know, we're really getting a perfect this particular channel. It's like, can you ten next channel? If so, why even bother? It's like you're going to perfect this tiny niche and then you're going to have skills which are no longer relevant because you just weren't paying attention.

00;37;32;09 - 00;37;40;19

David Barrett

Like, we don't invest in anything that can't scale a thousand X because if you want to scale a thousand X, you got to get started sometime. I don't know.

00;37;40;20 - 00;37;50;17

Patrick Campbell

Interesting. What's really funny? You're like quintessentially the definition of optimizing for the long term and that's really what it is like. You got a product background that that's where it comes. Like, how did you get here? Like how did you get to Expensive?

00;37;50;17 - 00;38;05;28

David Barrett

I had my background. I've been a programmer since I was six, computer graphics and video games and my jam works in a virtual reality labs. University of Michigan video game industry in Texas for a while, then push-to-talk video conferencing screen sharing that that distributed content just.

00;38;06;07 - 00;38;06;13

Patrick Campbell

In the.

00;38;06;13 - 00;38;22;05

David Barrett

World. You know, my background's all in very hard technologies, which is maybe an unlikely background for the expense report magnet that I've become. But I would say I've always thought in terms of like distributed systems, decentralization, viral growth, because that's just like everything I've.

00;38;22;13 - 00;38;22;21

Patrick Campbell

Yeah.

00;38;22;24 - 00;38;35;07

David Barrett

Yeah. I think that my background has lent me towards thinking about technical solutions and automatic solutions to problems of all sizes and marketing and sales are just they're just problems like any other. Like those can be automated too, if you choose to.

00;38;35;07 - 00;38;52;05

Patrick Campbell

We have hints of how you think and how you think about things, but we have a lot of the standard style learnings because, you know, we we we haven't been in the game as as long even previous jobs. And so it's one of those things where you've kind of like gone all in on some of the things that we've like maybe half assed.

00;38;52;05 - 00;38;58;18

David Barrett

Yeah, I mean, I've seen it. I this is like the seventh start up. I've been part of the first I've started, but I've seen it done badly again and again.

00;38;58;18 - 00;38;59;21

Patrick Campbell

This style or something.

00;38;59;21 - 00;39;12;14

David Barrett

No, no. As we go to this for the traditional style fails or like let's say like everyone follows the same playbook in Silicon Valley. Well, let's say I give you a book, it's like, hey, follow the is this book. It fails 95% of the time. If you like that book.

00;39;12;17 - 00;39;13;17

Patrick Campbell

Let me find the 5%.

00;39;13;17 - 00;39;29;10

David Barrett

Yeah, but like and so instead it's like, well, clearly no one has any idea like, all the best practices fail virtually always. And so I'm just going like as an example, no one knows anything. I also don't know anything. We're just going to figure out as we go and be guided by what do we want to be true intel.

00;39;29;10 - 00;39;44;16

David Barrett

We know it's not true. Let's just be open to the possibility it is. Can you build a company that you want to work at forever? Can you surround yourself with just a team of super awesome people? Can you not have managers like all the that we hate? Just like challenge? If it's truly necessary.

00;39;44;27 - 00;40;03;22

Patrick Campbell

You remind me of. I don't know if you ever came across Patty McCord, Netflix chief Talent officer for their Big Rise. And she's no longer there. She's retired, but very similar, like 80. So she ran h.r. And recruiting. She's like, why are we doing it this way? Like, this doesn't make any sense. Same kind of vibe. Have you seen other companies adopt some of this stuff or.

00;40;03;22 - 00;40;23;05

David Barrett

No, and not really. So first, because again, it requires a lot of things to go right. That requires that you have an inherently profitable business model. And so then out of the gate, 99% startups are just disqualified. Second, you need to have the patience for a long outcome. And then that's like, okay, like disqualifies like the next 90% because.

00;40;23;05 - 00;40;41;23

David Barrett

I would say there's like two business models in Silicon Valley. There's like build a viable business like video or there's sell to a bigger sucker, which almost everyone does. And so all of the best practices are basically about how to sell to a bigger sucker. And there's really no attempts to make any sort of business underneath it. And it always ensures offices get rich.

00;40;41;27 - 00;41;00;20

David Barrett

The founders sometimes gets rich, the employees always get, and that's fine. That's just the way it works. And everyone's just kind of like signed up for that. And so I think that you have to disregard all best practices from day one and focus on trying to build something big. And I maybe this comes back to this talent, ambition and sort of humility sort of thing.

00;41;00;21 - 00;41;08;12

David Barrett

Like you need to have a team from the start which embodies that and a conviction to keep distilling it further and further over time. And it's like it's a very patient model.

00;41;08;12 - 00;41;12;18

Patrick Campbell

Was the profitability piece just so you have the freedom to play the long term? Basically.

00;41;12;18 - 00;41;15;04

David Barrett

Yeah, because once you have like everyone thinks and you're like, oh, what's your, you know.

00;41;15;09 - 00;41;16;09

Patrick Campbell

Three month plan. Yeah.

00;41;16;13 - 00;41;34;08

David Barrett

Oh, or you burn rate or whatever it is and it's like, you know, it's no runaway, there it goes. I go with a runway and like once it becomes infinite like that, just as a whole different world because I was like, I'm confident that I can make the lives of my team amazing forever because we have a lot of visibility into the future as much as anyone does, I guess I'd say.

00;41;34;08 - 00;41;55;22

David Barrett

But we're not. We just move. We spend our risks around so widely that it takes like, you know, a pandemic. It doesn't doesn't stop us. Like there's like huge things you can we can endure. And if you sort of just take a mindset of like we are going to diversify our risks as much as possible, we're going to centralize or control as much as possible, and we're going to make sure that we have a plan that's going to get us to, you know, the long run.

00;41;55;29 - 00;42;12;25

Patrick Campbell

So like if you're selling something that looks, it costs more, you know, maybe doesn't actually you need to require a salesperson. But I'm thinking of a lot of like B2B SaaS companies, right. Do you think there's a world where this could work for a some way type of company that traditionally has like an inside sales model?

00;42;12;26 - 00;42;30;19

David Barrett

I would say no. And the reason for that is I think that when it comes to if you are going to execute that classic book like Go USA and you know, economics, your entire business model cannot be profitable and will not be will not ever be profitable. And it's like and I don't know why people think it's possible.

00;42;31;08 - 00;42;47;13

David Barrett

I would say the only companies that follow that path and get profitable do it because eventually they're able to establish a channel sales model which is different. And so they're saying, I'm going to have an unprofitable model for a decade and just like fund it with investors. And then I'm going to sort of like start acquiring and build out of channel sales.

00;42;47;13 - 00;43;02;07

David Barrett

And then finally, I can flip this a profitability like that works, but that part that you started with was never going to be profitable is got to accept that upfront and because but it also takes a long time to build up a sizable sort of customer base and product line that you can actually do a channel sales strategy.

00;43;02;17 - 00;43;30;11

David Barrett

And so like that strategy, which is like, okay, it might get profitable if you switch tactics in a very long term, if you can survive that long, it burns so much cash to get there. There's no way you're going to have to hold on to control of the company to get there. And furthermore, there are so many investors that you need to make promises to so early and they're such outlandish based upon such that basically, I don't know that you can have such a grounded team and operate such a delusional model for such a long period of time.

00;43;30;15 - 00;43;38;03

David Barrett

And then it's like after 12 years, this is like, All right, everyone, now let's drop all the debt. Now let's do it our way. It's just like you just can't sustain the fiction for that long.

00;43;38;03 - 00;43;40;19

Patrick Campbell

How did your because you had investors at one point it was.

00;43;40;21 - 00;43;41;03

David Barrett

Investors.

00;43;41;03 - 00;43;50;28

Patrick Campbell

Did that The numbers have just been good. So they don't they're on board like it and not in the sense of what were doing, but like normally, like it sounds like you didn't make those promises to them, that type of thing. Or like, how does that work?

00;43;51;01 - 00;44;07;29

David Barrett

So we did like, you know, I think three rounds investment like series. I was just like just before seed was the thing sort of thing. So the Series 18 is based upon just like the founder's personality. It's like they're like your visions. You tell a good story. Short Series B is like, Do you have anecdotal traction? And like, seriously, as far as you like, do you have some early, like fledgling metrics sort of thing?

00;44;07;29 - 00;44;28;06

David Barrett

Yeah, our seriously investor out of Boston was actually to you and who specializes in product led growth companies. And so they understood our model and so they saw our like negative revenue trend, things like this and like, oh, this is what we're looking for. And now it's more common. But I would say so. I mean, we kind of were able to go through the path without having to make wild commitments, and then we're just like, okay, cool.

00;44;28;06 - 00;44;32;25

David Barrett

Now we're just off to the races. Now we just like, make money, just keep going. We just haven't raised money since, I don't know, it's like six years.

00;44;32;25 - 00;44;48;14

Patrick Campbell

Just Yes. And then I think this is also giving you some freedom to do. You know, you already talked about this Super Bowl ad and stuff like that. The one thing I wanted to ask you about, you sent an email 2016. I think a lot of people looked at that in the traditional kind of playbook and were like, Oh my God, You know, even if I agree to it, what is going on?

00;44;48;14 - 00;44;54;18

Patrick Campbell

All right. And then there are other people who are like, You shouldn't have done this, but I'm fine with it. Like in like, what was the fallout? So I give the rundown.

00;44;54;18 - 00;44;57;21

David Barrett

So you're talking about basically I emailed 10 million users.

00;44;57;21 - 00;44;59;01

Patrick Campbell

I'm glad you're so flippant about it.

00;44;59;02 - 00;45;17;19

David Barrett

Just say anything less than a vote for Biden is a vote against democracy. So the company has been pretty socially active for a while. Like we have a nonprofit called It's Inside That org. We feed thousands of families on SNAP assistance. We pay for people to get vaccines. We've got like 60 active campaigns, basically, and all across a bunch of that funds.

00;45;18;04 - 00;45;34;08

David Barrett

We were active and sort of like so in Portland. Portland's like the heart of the BLM protests. And so like we're working behind the scenes to work with BLM protesters and things like this. So like social engagements been like a part of our DNA for a very long time. And so when it came up to, you know, the most recent election and again, everyone follows the same process, like I mentioned earlier.

00;45;34;17 - 00;45;58;21

David Barrett

So I went into what's next and I said, Hey, everyone, I think there's a problem. Democracy is crumbling before our very eyes and that will create an adverse business climate because not many essential parts get submitted during a civil war and solution. I think we need to online shop like this is a solution that create a lot of internal discussion because we've got people as a highly diverse team, every political spectrum, every point in the local spectrum, and then people are like, But then it follows our process like any other.

00;45;58;21 - 00;46;16;09

David Barrett

And then I also personally like this is my draft of the newsletter. I think we should we should post and people like chimed in there and like edited it and squashed other things like challenge certain things, then went to a different slack room called the fact check room, the tax rec room. The rule of that one is so you can you can say like, I'm going to challenge whether this particular fact is true or false.

00;46;16;29 - 00;46;26;21

David Barrett

And then the rule there is everyone can make one post on a slack thread. You can't name anyone else. You can't directly rebut anyone else. You just make your strongest arguments.

00;46;26;26 - 00;46;29;02

Patrick Campbell

So there is so little debate stuff.

00;46;29;02 - 00;46;43;04

David Barrett

Yeah, exactly. Yeah. But then because otherwise one person just grabs mic and talks forever, it's like, no, make your strongest argument. And so we did all this for all the facts of it and then great. And then we're going to have our shot, our top tier group people have been here. There's like, we've got this growth and recognition program.

00;46;43;04 - 00;47;00;12

David Barrett

There's four different tracks. If you get to the top, any of the tracks, you're part of this group. And this is kind of like the Senate of the company that makes it great. This requires this for each fact. It requires a supermajority of the Senate to agree that it's basically worth to pick one of the answers again in so far as the company is determined.

00;47;00;19 - 00;47;15;19

David Barrett

This is true. And then at the very end, it's like, okay, we're going to if we need a supermajority of this, to agree to send this particular draft of the newsletter, It's not my my one regret for this whole thing is it's I signed it like it was me, but it was actually like, no, the whole company participated in writing this newsletter.

00;47;15;20 - 00;47;30;22

David Barrett

This isn't my voice. This is the company voice. And we didn't lose anyone over it. Like we know it's wild. And so because I think everyone recognized we're trying to be inclusive of a wide variety of opinions. But if your opinion just is just not the majority, like if a supermajority of people disagree with you, we're not going to block on this.

00;47;31;17 - 00;47;54;16

David Barrett

So so we sent it out and kind of like, you know, like everyone's like, oh my God, your company's going to go under or something like this or like, you're going get sued or you're probably breaking some kind of law or whatever. And it's like, Nope, nope, nope. Less than 0.1% responded in any way. And of those, we're like, when you try to trace down the results, the vast majority of people who complained were basically people who weren't even really customers in the first place because of this huge premium contingent.

00;47;54;25 - 00;48;10;05

David Barrett

And it's like I'm canceling. My son's like, sounds like, Dude, you never paid us anything anyway. It's hard to measure the stuff. I believe in the long run. Like we gained so many more customers out of it than the few that we lost. Because in the end, democracy isn't actually that hard of a sell. It's just like it wasn't even really about Trump specifically.

00;48;10;05 - 00;48;14;15

David Barrett

It's just like we need to stand up for democracy and that that crosses all political lines.

00;48;14;16 - 00;48;17;24

Patrick Campbell

I think that trains you to take bigger risks too, which is good.

00;48;18;01 - 00;48;23;27

David Barrett

Especially when you have long employer retention, because then like some people are freaking out and then like our old guys, it's like, it's gonna be fine.

00;48;23;28 - 00;48;25;28

Patrick Campbell

Three Remember four years ago we did this other thing.

00;48;26;18 - 00;48;37;27

David Barrett

That was like, you know, like, and it was fine and like, it's going to be a couple of days and it's going to be fine. And we can look back in pride because we knew this was a time when we were actually called to take action and we stepped up and we're going to feel very proud of that.

00;48;37;27 - 00;48;40;10

David Barrett

And and we hope we can inspire more to do the same.

00;48;40;14 - 00;48;45;14

Patrick Campbell

Do you think the PIN is back in the grenade for the Civil War thing? Kind of a political question. No, no.

00;48;45;15 - 00;49;03;27

David Barrett

I think it's I mean, I think that like like, for example, it's like, you know, there's a cyber ninja that in Arizona to, like, you know, find the lie or whatever. It proves that Biden won by even wider margin the like, see proof of something. It's like, what are you talking where did you even get that? So I think it's worrisome.

00;49;03;27 - 00;49;30;09

David Barrett

I think there's like the combination of like, you know, there's. Q And on sort of the big lie like vaccine skepticism ism Bitcoin, I think there's like a whole bunch of stuff which bears no basis in reality whatsoever. And I think that somehow and this is my theory, I have no idea and this is true, it's like the existence of one thing that is widely accepted, but obviously untrue makes it easier to accept other things such as this issue because it's basically and hinges from reality.

00;49;30;09 - 00;49;46;15

David Barrett

It's just like I think the financial system is going to blockchain or something. And also we can't trust democracy anymore so much. Also, the vaccines are implanting microchips. This is crazy. It's obviously there's like these these satanic, cannibalistic pedophiles. Now, that doesn't sound unreasonable, right?

00;49;46;15 - 00;49;47;03

Patrick Campbell

Yeah, yeah, yeah.

00;49;47;04 - 00;49;50;12

David Barrett

Even the like. No part of this makes any sense whatsoever.

00;49;50;12 - 00;50;04;09

Patrick Campbell

It's yeah, it is fascinating. So what did you think of like, I don't I'm pretty sure you're familiar with, like, the base camp guys, what they did. And obviously it was not just them, but like Coinbase and others. Like, it feels like expensive. I wouldn't do that at all because it doesn't it kind of violates the ethos. But I.

00;50;04;09 - 00;50;05;26

Patrick Campbell

Do you think they're making a mistake in that way?

00;50;06;05 - 00;50;28;17

David Barrett

They it's not a mistake. It's not a mistake. The choice to establish a place which is authoritarian is just is it's like, okay, if you work at Coinbase or base camp, the only sort of political discussion is that which the founders support. And that's just that. And so now that's a place that's like that. And so it's like it's not diverse, it's not inclusive, but there's no law saying you have to be, at least not yet.

00;50;28;26 - 00;50;38;14

David Barrett

It's not a mistake to make a place that's not inclusive. I think it just is very counterproductive in the long run.

00;50;38;14 - 00;51;00;20

Patrick Campbell

The bar that you you set, it seems like you can have nuanced, disagreeable discussions without it going into like craziness. Right. To kind of make a generalization. I think a lot of companies, because they don't set that bar, they end up having and it's not an age thing, but they end up having a swell of people who are having a nuanced, disagreeable conversation.

00;51;00;20 - 00;51;26;09

Patrick Campbell

And without a check and balance of like you get one post and like this type of thing, they just want a playbook to like allow that. So they go, We're just going to outlaw because that's the easiest thing to do, right? And that's why I like talking to you. I have already over on time and want to be respectful is like it would be interesting for you to like publish if it's interesting to you like a playbook of like, yeah, we can have disagreeable conversations where there is left, right, whatever views at the company because this is kind of how we structure it.

00;51;26;14 - 00;51;49;06

David Barrett

Yeah, but I would say this not all disagreement has to be disagreeable. And I think it's about starting small, having internal discussions, working out your processes there and also like so internally where we say like we're we only two rules. Rule number one is get done. Remember to it, don't collect for everyone else and everything traces back to that and you kind of just and you hire awesome people and you're in, but you're also very strict in these roles.

00;51;49;15 - 00;52;05;06

David Barrett

As basic as I think there's a lot of companies where there's someone obviously if everyone else and no one says anything, and that creates it's kind of like the broken windows theory. It's like, Oh, that guy gets away with it, then I want to do whatever. Yeah, we got two rules. They're not well-defined, but they're real. I think that you're ruining it for everyone else.

00;52;05;12 - 00;52;20;21

David Barrett

And was also great and I was like, Yeah, yeah, that's kind of I don't know exactly how. It's kind of like what the Supreme Court is like. What exactly is pornography? It's like, you know, Yeah, yeah. It's the same thing for most things like this. I think most companies are like, it only breaks the rule. If it objectively breaks a written rule, anything else is accessible.

00;52;21;00 - 00;52;41;06

David Barrett

And we're like, No, no, no. Most of our rules are intentionally ambiguous because by the time it's broken, it's obvious, even if it was never defined. We have a company that really respects, again, like, you know, inclusiveness and diversity, and that means creating an environment where people feel comfortable being themselves and that means being comfortable to raise things which others will disagree with.

00;52;41;06 - 00;53;00;03

David Barrett

And and having the intellectual, the emotional maturity and habits and tactics to sort of resolve it. There's no like magical playbook for that. Yeah, I just I think it really comes down to a commitment is like, do you want to work here forever? If so, do you like that? If not, it's like if it were your lawn, you would go pick it up because it's your lawn.

00;53;00;06 - 00;53;03;21

David Barrett

It's like, just treat your company like and like at least as nice as you would treat your lawn.

00;53;03;24 - 00;53;10;27

Patrick Campbell

Have you ever had a situation where there was such an issue? Not necessarily political, but anything where like the conversation kind of devolved into like.

00;53;11;03 - 00;53;30;05

David Barrett

All the time? Okay, Yeah, yeah. I would say and we've gotten better at it, but I would say, as I mentioned, so we're very good at screening for talent and for ambition. Humility, it's hard, reveals itself over time because anyone can keep it together for like an interview or a week or even a couple of years. But over time, people kind of like they figure out maybe like harboring some deep resentment, but hiding it.

00;53;30;10 - 00;53;45;22

David Barrett

And then they figured out who else has that same resentment. And then they create their own kind of like toxic bubble. And then something happens and then they all basically try to flex at the same time. It just comes back to that. What are the things you're afraid of? I'm more afraid of internal collapse than I am anything else, because I've seen it happen again and again.

00;53;45;22 - 00;54;02;14

David Barrett

You can shave off an entire group of people over something which is completely nonexistence, something non existent fear. But I think we've just been through that enough especially was like, yeah, we lost like, you know, like six people over this issue which had no basis whatsoever. But now they're gone and everyone who's left is like, Well, you know what?

00;54;02;16 - 00;54;18;16

David Barrett

That's why we're all journalists. We didn't strictly need them either. It's like we're just this amorphous blob. It's like we're a smaller blob now, but like we're still enough to get everything done. And so it's kind of like distilling a balsamic over time. It's like, yeah, a lot. It's not about how much boils off, it's about what's or what remains.

00;54;18;16 - 00;54;32;02

David Barrett

And so I think you just need to be comfortable that it's like you can be a great place and also not the best place for everyone and just say it's like, Hey, you seem really unhappy here, everyone else seems fine. And I'm not saying that you're right or wrong, I'm just saying there's a lot of places to work.

00;54;32;02 - 00;54;35;19

David Barrett

And is this really how you want to spend your time? Because it's not really how I spend my time.

00;54;35;24 - 00;54;50;16

Patrick Campbell

This is the hardest thing we learned in the past three years. It was we have to accommodate everything. There's this thing. And then literally in the last 18 months we started, we went from a place of like, it's our fault. We need to be better. We're bad narcissism.

00;54;50;16 - 00;54;51;09

David Barrett

Kind of thing. Yeah.

00;54;51;09 - 00;55;06;10

Patrick Campbell

And then we were like, and then someone told me actually earlier this year when we started, like the final kind of phase of this was like, Yeah, but so-and-so is greatness environment. Here's all these people who are amazing in this environment and it's not like you or someone else is acting differently to them versus the other person. It's like, Oh, maybe it's.

00;55;06;10 - 00;55;21;17

Patrick Campbell

And then it's like, well, they're not bad. There's this misalignment. Like they think about the world differently and that's okay, like you told us else, you know, and you can have like really good off putting and you know yeah, there's always a little bit of like shocker, you know, hopefully not resentment but sometimes it happens. But like, yeah, it's fascinating.

00;55;21;18 - 00;55;51;21

Patrick Campbell

This has been great. We've kept you longer than we're supposed to. But mean, all this is, you know, I don't normally use like mind blowing. This is definitely mind expanding. No, seriously. Like, I'm not, I'm not trying to blow smoke up your ass. It's like. It's like a very it's one of those things where, like, whenever you can challenge, least in my mind, whenever I have someone who challenges, like, either things I've learned or things that, like, I'm assuming are the right ways of doing things, I think it's really important because it proves there's other ways up the mountain, but also proves that, like some of the narratives like and some of the narrative like

00;55;51;21 - 00;55;55;12

Patrick Campbell

is and is having serious consequences that you're not thinking about.

00;55;55;18 - 00;56;13;23

David Barrett

Yeah, yeah, I, I think that's why I like team building and is like the hardest long term challenge, I think. And when it comes to grappling with basically these like what kind of behaviors to tolerate, I think that our rule is like we can tolerate basically anything except for intolerance itself. You can be you. And that doesn't mean that we always have to like everything about you.

00;56;14;01 - 00;56;21;09

David Barrett

But the thing that we cannot tolerate is you creating an environment which isn't inclusive of others. And I think that's been kind of our golden rule there. Yeah.

00;56;21;18 - 00;56;23;29

Patrick Campbell

Awesome. And where can people find you? Anything you want to plug.

00;56;23;29 - 00;56;28;23

David Barrett

In Twitter demerit DVR our EDT or expensify and Amazon find.

00;56;28;27 - 00;56;33;00

Patrick Campbell

Awesome. This has been awesome man. Thanks.

00;56;33;00 - 00;56;54;00

Patrick Campbell

A huge shout out to Dave Barrett. That was one of my favorite podcast episodes I have ever done, so I can't thank you enough. Dave Now you have what it takes to be deliberate with your process. Today we talked about marketing effectively by being unconventional, the roadmap to companywide efficiency, obsessing over process, overcoming fears as an operator, and the two rules for disagreeable discussion.

00;56;54;14 - 00;57;17;26

Patrick Campbell

And if you want to support panel and the show, we would greatly appreciate it if you left a five star review of this podcast or the equivalent rating wherever you listen or watch the podcast, gods tend to like that type of thing, and we like to appease the podcast gods. Thanks for listening. Make sure you subscribe to and tell your friends about Protect the Hustle, A podcast from Panel Recur the largest, fastest growing media network dedicated to the world of subscriptions.