Sramana Mitra: In 2008, Concur was already public and quite a successful company. What did you think of the opportunity? Let’s get a bit granular because we do cover Concur very extensively. Recently, we did a story on Expensify as well. The expense reporting space has shown up on our blog from many different angles. So we have an audience that’s familiar with what you’re doing. Could you help us understand, specifically, what you would identify as the opportunity to build a new company in that space? Positioning, by the way, is a discipline that we teach and explore very extensively and very diligently. It would be interesting for us to learn how you position your products.
Chris Farrell: Let me begin by discussing the rationale for entering a competitive space. For entrepreneurs who are just starting out, it’s nice to find a green field opportunity where there are not many competitors. At the same time, it’s difficult to educate an entire market. In our case, we saw Concur. As you mentioned, they are a public company and a very successful one as well. We saw an opportunity to leverage the market need that they had created and to essentially offer a product that was going to be better in certain ways in certain markets.
Specifically, the market we chose was the small business market. Concur, having started with enterprise, were naturally going to have a strong presence. What we wanted to do there was to essentially identify the specific needs of companies outside of their core market. We started by leveraging the strengths that we had as a company. We’re always resource-constrained, right? Our strength, as a three-person shop, was an understanding of the particulars and details of accounting for small businesses. We started with the largest common denominator, and that’s QuickBooks. QuickBooks has a lot of fields and a lot of workflow elements that are specific to that application and we started building around the integration and workflow components.
Sramana Mitra: You basically developed expense reporting piece of the QuickBooks flow?
Chris Farrell: That’s right.
Sramana Mitra: Interesting. Tell me more about what you got from Intuit in terms of support for bringing this to market.
Chris Farrell: The support from Intuit was on an equal footing with any other player they had in their ecosystem at that time. We all know the parallels of dancing with elephants. Intuit was a company that we partnered with from a technology perspective, but we received no specific marketing or promotional benefits. We were competing in the Intuit marketplace based on our own merit.
Sramana Mitra: We hear a lot from people who are working in the Salesforce ecosystem, for example. They’re getting tremendous amount of help from Salesforce.com in bringing their product to market. You’re telling me that Intuit does not offer you any comparable value?
Chris Farrell: At that time, Intuit offered a marketplace for vendors. Speaking from a company that had very little leverage at that time, they had no reason to promote us above anyone else at that time. So we were really competing on merit.
Sramana Mitra: Were there other expense reporting solutions on the QuickBooks platform?
Chris Farrell: It’s a relatively crowded field, so there were many.
Sramana Mitra: How did you position against them and how did you win against them?
Chris Farrell: This really has to do with our go-to-market strategy. Our go-to market strategy was different from everyone else’s. There are a variety of go-to market strategies in play such as field sales, inside sales, and freemium model. We chose one to court the experts and the influencers. It was our belief that there are a few people out there whose voices carry disproportionate weight in influencing purchasing behavior and in educating the market. We started with a few of the key influencers.
The trick there was to solve their particular problems nobody else was solving. Before we started writing code, we spent a lot of time in getting a sense for the QuickBooks application and the workflow and integration elements that other companies weren’t addressing at that time. We weren’t trying to build anything from a marketing perspective such as fancy new features. We thought that if we could really satisfy the core buyer and impress the luminaries and influencers in the market, that will the most cost-effective way for us to gain market traction and begin building a brand around the professional accountant market.