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Bootstrapping to Inc. 500: Tallie CEO Chris Farrell (Part 6)

Posted on Sunday, Sep 28th 2014

Sramana Mitra: We just did the story about Expensify. Of course, they really benefitted from the heavy mobile adoption. Their go-to-market strategy is completely from mobile users. People in an organization start using their applications and then, they go and tell their accounting department, “We want to continue to use this. We should go buy it.” Then their customers come and buy it. They are growing steadily very well. It’s an organic growth strategy. Was that mobile adoption a major technological shift that threw you into this kind of pivot three years back?

Chris Farrell: It was part of the reason, albeit a smaller part of it. This is the key for people who are starting their companies. In our case, creating a product and bringing it to market, and getting it to be adopted typically requires more than one key competency over the long term. Companies are always looking to find the most defensible positions for the long-term. In our view, the mobile component would quickly become table steaks. Everybody would have a high-quality mobile interface. That can be created very quickly. In just a couple of months, people can be participating in the app store with a beautiful app.

We looked at the market and we deconstructed it into three primary areas of interaction and opportunity. Mobile is one. The middle is automation. The third leg of the stool is integration. Our view is that mobile and integration would quickly become commoditized. There’s very little there that can be differentiated. However, the notion of automation would be the most important and most substantial differentiator in the market. When we investigated that layer more deeply, we came up with a number of key differentiators. First of all, Concur and Expensify are both created from the same mould as version one product. It was essentially taking an Excel spreadsheet and Excel spreadsheet type of workflow and creating a web form online. The process is to create expense reports and add lines to it.

What we wanted to do with Tallie was to reverse the workflow. Instead of starting with expense report and attaching line items, we start with capturing the detail. Then an expense report will be an option down the road. It will not be a necessity. If you have any consultant who’s working on two different projects and submits expense reports that need to go to two different project managers for approval, what we could do is we could automate that process by automatically bundling the expenses based on project. Therefore, the same document doesn’t have to be routed to two different managers. You can actually create custom expense reports automatically for each manager and push them through. There are a whole host of ramifications that fall out of that when we start thinking of essentially how to automate the entire process. That’s where we saw the key leap.

Sramana Mitra: It’s more in the workflow, and smoothening the workflow using more automation principles is where you created the differentiation?

Chris Farrell: Correct. My recommendation in terms of working with people who want to participate in very crowded spaces would be to start with the end game. The end game, in this case, is the end users aren’t going to want to do any work when creating expense reports. If we think three to ten years out, that is going to become a reality. With that in mind, you end up building a very different product.

Sramana Mitra: Interesting. Now you’re back to growth mode after the three years pivot.

Chris Farrell: We’re now growing faster than ever. We essentially have carved out a space that nobody else was participating in, which is that hardcore accounting market. That’s because when we think about Concur, they’re really pursuing a field sales model. Expensify is pursuing a freemium model that is attractive to consumers. We are pursuing the accountants. We have a much differentiated go-to-market strategy. Our product differentiation is substantial in terms of those three components – mobile, automation, and integration.

Sramana Mitra: You continue to be a bootstrapped company?

Chris Farrell: Yes.

Sramana Mitra: You are just over $5 million in revenue?

Chris Farrell: Yes, we’re in the $5 to $10 million range now.

This segment is part 6 in the series : Bootstrapping to Inc. 500: Tallie CEO Chris Farrell
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