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Building A Profitable, Steady Growth Subscription Business: Expensify CEO David Barrett (Part 3)

Posted on Tuesday, Aug 26th 2014

David Barrett: Since they thought they were approving something else, they went along with it. In the first year of getting through that barrier, there were many false starts. It was a very depressing and difficult time. The most important piece of advice I would give anybody while going through this difficult time where you’re trying to come up with ideas is don’t tell anybody. The only person who knew what I was doing was my wife. No one in my circle knew anything about the prepaid debit card space, banks, or any of the stuff that I was working on. How could they be helpful? When you ask people who don’t have the ability to help to give it their best shot, they do a bad job. Most times, despite their best intentions, they just come off demoralizing. I’ve concluded that people can’t be helpful if they don’t have the capability to.

I learned this several years ago. I had this group of friends I always hung out with. I was always pitching ideas. They would say, “That’s an interesting idea, David. Here’re some problems you might encounter. Let me save you some time. I’m going to help you understand why you shouldn’t even try.”

Sramana Mitra: One thing that we absolutely strictly follow in our program is not to validate your idea with random people. The only people that, I think, matter in a validation are the potential customers. Others are completely irrelevant including potential investors.

David Barrett: I completely agree with you. I would say it’s actually more than validation. I would say there’s the enormous risk. You start talking about your ideas too early. When they say, “That idea is not too good”, they’re probably right because most ideas aren’t that good, but you have to grind through that. The grind is so depressing and tiring. If you start telling everybody else your ideas, it just makes it so much harder. If you say, “The idea that I’ve shared last week, I’ve concluded I’m not going to do it”, they’re like, “Told you.” This is a lesson that I came to and I’m glad you’re teaching it to the world. That is the most important thing in this phase. Just figure it out because if everyone had advice, they’d be doing it. If they’re not doing it, their advice is no good anyway.

Sramana Mitra: Let’s go back to my original question, what have you accomplished given now that you’ve explained the thought process behind the prepaid versus the expense reporting?

David Barrett: While I was at Akamai, I primarily did research relationship building. I did some very general technology building. In order to do what we do, we have this internal technology that we call Bedrock. It takes an incredibly reliable and secure database for processing financial transactions. I did a lot of high-level stuff but I didn’t really work on Expensify and I didn’t really want to until I’d had already left, obviously for intellectual property reasons.

Sramana Mitra: I got the sense that you were working on Expensify whilst at Akamai but it doesn’t sound like it. Let’s get to the point where you were fired from Akamai. You’re free to do whatever you want to do. You now start working on Expensify. What did you do?

David Barrett: That’s when I started building it. That’s one nice thing about being a technical founder. You don’t really need everybody else’s help. You just start on it. I worked solo until I approached TechCrunch50. I applied and I got accepted to demo at TechCrunch50 in September 2008. That’s when I basically decided to tell the very first person about what I was doing. That person was who I wanted to be my co-founder and who eventually said yes.

I needed to convince at least one person to be with me because it’s just too hard to do it alone. I wanted to make sure that I had something very compelling before I asked him. I knew that I had the banking relationships in place and that I had the product design. I even had a prototype working. Furthermore, I had the ability to launch it. This is something that I learned over a long period of time. Product development is so much easier when you have customer acquisition. I wanted to be able to prove that I had some way to acquire our customer before I actually even launched. I was well prepared before I had this conversation with my co-founder to convince him to join.

This segment is part 3 in the series : Building A Profitable, Steady Growth Subscription Business: Expensify CEO David Barrett
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