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This month marks the sixth anniversary of Expensify. In may 2008, David Barrett got the idea of a world where expenses reports don’t have to suck. With this idea in mind he rallied the troops and founded Expensify, and for six years we’ve been experimenting with countless ideas on how to make expense reports not suck.

Experiment 1: Make a website that doesn’t suck

Our first experiment was with the design of our web application. Everybody agrees that having a good-looking and easy to use application makes the experience more pleasant, but saying that is easier than doing that, and it’s been a long road:  (It’s kind of funny to see some of the early designs…  Can you see when we hired our first designer?)

Experiment 2: Make a mobile app that doesn’t suck

Next up was to experiment on mobile. As crazy as it sounds, we created our own cross-platform framework in order to write an application once and deploy it natively on each platform.  (It uses an embedded JavaScript engine wrapped with native controls, so it has native UI performance but cross-platform business logic.) It allows us to support iPhone, iPad, Android, Blackberry, Windows Phone, and even Palm while having less than 3 mobile engineers. And just like web, it’s been a long road:

Experiment 3: Re-invent receipt management

But while design is important, making it look good is just the tip of the iceberg: what it actually does is even more important. Accordingly, we were one of the first to introduce a receipt scanning technology that we call SmartScan. Take a picture of a receipt and we’ll extract the information for you — automatically, no typing required — removing a major hassle. And when you mix that with our ability to import the transactions from your credit cards or bank account, we can also automatically categorize the expense too.

Experiment 4: Compound the disruption by stacking technologies

Building SmartScan and Credit Card import required more experimentation, and we eventually opted to build our own technology instead of buying a solution. This allowed us to have a complete control on how to combine these incredible features, achieving “1+1=3″ where the whole is greater than the sum of its parts.  For example, when you combine SmartScan’s ability to interpret receipts with our existing ability to forward email to receipts@expensify.com, radical features like extracting trip information out of these receipts become possible.

Experiment 5: Make employees happy in all companies, of all sizes — even those that don’t adopt

bg_kBlock_smartreports_2x

So while on one hand we have experimented extensively with technology, thanks to our freemium model we have been able to experiment with a very wide range of users and companies. Some of those companies – despite all the advantages of going to the cloud — ignore the pleas of their employees and still cling to their old Excel and paper reports (weird) leaving their more tech savvy users in distress. We heard them, and though we cant make their companies adopt, we can at least do their reports for them: for this we created SmartReports to allow them to use Expensify and still submit a report in their company Excel template. While the expense report process of the company remains Excel based and unchanged, at least the Expensify user has a far better experience.

Experiment 6: Get companies to adopt through accounting integrations

But expenses reports are just one piece of the accounting of a company: integrating with the accounting packages is crucial, and it needs to be seamless and easy to use. This required a lot more experimentation, with Quickbooks (new version for QBO is out!), Xero, our brand new NetSuite connection, Dynamics, Salesforces, FinancialForce, or pretty much any kind of accounting package you can imagine. All these homemade integrations have given us the opportunity to learn how real-world accounting works at the lowest level, resulting in us now having an integration platform that allows us to rapidly create any kind of connection to any kind of system, supporting small jobs as well as large. We call this system Loading Dock, as it is an all-purpose tool for moving enormous amounts of data in and out of Expensify, shipping it around the world to any system you need.

Experiment 7: Leverage the inherent similarity of data

Invoice and BillsThe more we learned about expense reports, invoices, and bill processing, the more we realized they’re all the same thing – so we experimented with that by adding invoicing. Being able to process receipt by email is closed to being able to process invoice send by email which is why we have a bill processing feature.

Experiments 8, 9, and more: So much to learn, so much to do

And the list of things we have play with can go on and one: mileage, odometer, per diem, units, bulk operations, domain control, commercial cards, report statement, tax, Wingman, importing from your scanner, etc.  The list goes on and on, and though most aren’t relevant to everybody, everyone is very relevant to somebody.  So where are we after six years and all these experiments?

First we have built a product that we are proud of.  Sure, we have our growing pains, but it’s amazing to build a product that is used and genuinely loved by such a large and growing number of people.

Second we’ve built a product that teaches us a lot, and mostly through the old-fashioned art of just talking and listening to customers — many thousands, around the world. The feedback that you give us is always read by someone, shared, and analyzed. Whether it comes from a help email, an answer to our newsletter, a mobile review — it’s always read, and always deeply appreciated. We value what you have to say and this feedback is our most important tool for improving our product. We learn from all these experiments to understand the need of our customer, especially the subtle reactions to our less obvious features. All this feedback, learning, and experimentation combines to give us a rich understanding of the needs and deepest desires of people using Expensify — and hating expense reports in general.

And last but not least, we’ve built a product that we use ourselves — and you can rest assured and we are the first to complain about its quirks, bugs, and provide feedback about it. This usage made us realize another very important fact: even the best expense report in the world still kinda sucks. It’s not the product that sucks, but the report itself. Whether because it is too slow, not worth it, too complex, or takes too much time — it doesn’t matter how you are doing it, how much you know the software, how well you know the process. Despite our best of intentions, expense reports still suck.

Lesson learned: The best expense reporting experience you can have is to not have to do an expense reports.

So our goal for the next six years is going to help you to not have to do expense reports.

No expense reports = joy

Two employees learning that they don’t have to fill expense reports anymore

Sadly, expense reports are still necessary in some form. But we can do much better than forcing you wasting your time doing them. To remove the pain in the process we simply need to remove the steps. We already have tools in place to help you do that, but they are bit complex to use and / or hidden. We can do better.

Our past experiments and the experience we have gained from them have allowed us to assemble a fantastic team and build an unbelievably powerful infrastructure to make that real.

Making that dream a reality is going to take time. But we believe the future of expense reports is the absence of expense reports. Our latest experiment, real time expense report is going to a huge step in this direction: buy. Buy something, take a picture of the receipts and get reimbursed. A world with no expense reports sound like a dream, but when you experience it, you’ll never want to wake up.

Calling All GL Coders

Jason Mills —  January 12, 2012 — 3 Comments

Yes, accounting and finance departments, we’re talking to you!

With 2012 in full swing, everyone at Expensify is excited by the opportunity to make this year even better. Don’t get us wrong, 2011 was awesome! But we’re a startup, and re-thinking the old to build something new is an oft-repeated mantra. As larger and larger companies increasingly drink the Expensify kool-aid – or our own Expensify beer thanks to a resident brewmaster – our sights are squarely aimed at the scary-sounding world of “enterprise accounting.”

As you may recall, in late-2011 Expensify unveiled functionality that allows anyone to create and edit a very flexible CSV export file. This functionality enables our system’s Categories and Tags to speak the parlance of enterprise accounting and CRM packages. It’s called GL Mapping, and we’re super excited about the potential of this functionality, especially in the context of our self-service, bottom-up adoption model. With that said, we are still in the exploration stage when it comes to enterprise accounting and ERP systems, and for some reason, it conjures images of scary pumpkins. So we thought we should take up some white space to learn what’s out there. Thus far, we’ve talked to customers that use Sage, SAP, Oracle, Netsuite, Intacct, and many others.

But more than names, we’re interested to learn about the types of accounting configurations that we need to support. Past conversations have worked out how to export Expensify’s data into a MySQL database before eventually feeding this information into an accounting package. This was luckily solved by a bit of accounting triage; in other words, correctly mapping the columns in the company’s database. We’ve also seen customers that must track a variety of inter-related GL Codes, both at the expense-level and at the report-level, and this has required a good deal of problem solving for all involved.

This brings us to the interactive part! We’d love to hear from you about your GL setup.  Specifically:

  • Do you have any pain points with Expensify’s existing GL functionality? What are they?
  • Do you feel like Expensify doesn’t support your accounting package or setup? Why?
  • Is accounting integration the most important factor in your purchase decision, or does other functionality like automation matter more?

Please join this conversation in the comments or feel free to email jmills@expensify.com.  Thanks!

Remember when Danger lost all their backups?  At that time I wrote about Expensify’s massively redundant, multi-tiered backup system (to two remote locations in realtime, and to two more remote locations nightly) in a passionate appeal to sanity.  Soon after that I turned off my Sidekick for the last time, and turned on my shiny new Palm Pre.  (And I ain’t going back!)

But now I read that RockYou has compromised the usernames and logins to 32 million social networking accounts because they didn’t encrypt a damn thing?  Come on people!  Encryption is so… I don’t know, 1942?

At Expensify, we take security incredibly seriously.  We spent pretty much the entire first year building a geo-redundant, PCI compliant datacenter that achieves… actually, now that I think about it pretty amazingly high uptime, while simultaneously remaining super secure.  It wasn’t easy.  But that’s our job.  It’s not an optional thing.  Either you do it secure, or you don’t do it at all.

In our case, we use a type of encryption called “split knowledge, dual control”.  It’s more complex than this, but we basically split our master encryption key in half, and store each half in a different safe deposit box (Witold controls one, I control the other) such that nobody ever knows the whole thing.  This means nobody can decrypt our data alone, not even me.

Additionally, this key is assembled in memory on our servers using a type of “turn two keys simultaneously” system (akin to a nuclear launch panel) and never written to disk.  So even if you physically stole the servers out of our hardened datacenters (something you’d be a fool to try), they’d be little more than really expensive paperweights.

Anyway, I understand social networking data isn’t as sensitive as financial data.  And I understand most web developers don’t know how to deploy and maintain realtime distributed transaction layers.

But I don’t find those very satisfying excuses, and I doubt you do either.

I was talking with a user today and the subject of expense report fraud came up — specifically, how can Expensify be used to fight it?  Great question, and the short answer is: avoid cash and use Expensify Guaranteed eReceipts.

But stepping back a bit, let’s review the problem.  As incredible as it sounds, the ACFE estimates that over $100B is lost annually to expense reimbursement fraud.  Yes, Billion.  T&E Magazine also report 20% of companies say outright false expenses are commonplace.  So fraud is an enormous problem, and if you don’t think it’s affecting you right now, there’s a good chance you’re wrong.  Indeed, it’s quite possible you have no way of ever knowing.

What can be done about it?  There are as many schemes as there are expense reports, and there is no silver bullet to stop it all in its tracks.  But the most common schemes can be prevented by mandating common-sense expense policy in a way that is respectful of the employee’s privacy and not a waste of their time.  Namely:

  1. Import expenses straight from employee’s credit cards.
  2. One-purchase one-expense.
  3. Discourage cash and capture receipts.

Taking each of these in turn:

1) Import expenses straight from employee’s credit cards.
The key to fighting fraud is tamperproof documentation: if the employee is ever in a position to manually enter expense amounts, the risk of mistake or “mistake” is just too high.  Accordingly, mandate purchases be done electronically, and then import those electronic purchases directly from the bank into your expense report system.  Expensify can import 94% of US credit cards, and offers IRS-ready, Expensify Guaranteed eReceipts in purely electronic form — without the hassle of easily-forged paper receipts.  Not only is it faster and more convenient for your employees to make purchases with a credit card, you get tamperproof documentation straight from the source.

2) One-purchase/one-expense.
Mandate that employees make a separate purchase for each item they intend to expense.  Combined with (1), it ensures each purchase has a separate, tamperproof eReceipt.  In particular: don’t bill meals to hotel rooms, don’t combine personal and business expenses into a single purchase, and basically don’t do anything that will need to be undone later.

(Though it seems convenient at the time to do this, it just passes the buck off until later: when filing the expense, they’ll need to manually separate them back out anyway, so that “convenience” actually just creates more work for everyone in the end.)

A one-purchase/one-expense policy saves the employee from needing to manually split expenses at the end of the trip, and helps ensure each purchase is separately documented in a tamperproof way.

3) Discourage cash and capture receipts.
Virtually everyone takes credit cards anymore, especially in the US.  Even taxis in most major cities take credit cards.  There’s almost no need to pay for anything on a typical business trip with cash, so cash purchases should be strongly discouraged and flagged for special attention in the approval process.

That said, in some rare occasions, cash can’t be avoided.  In these cases, require the employee to capture an image of the paper receipt at the time of purchase, so there is no opportunity for a key receipt to be “lost” prior to reimbursement.  It’s almost impossible to get a phone without a camera anymore; just have them take a picture of the receipt before putting it in their pocket.  The iPhone 3GS and Palm Pre have excellent cameras with auto-focus, and other phones often have “macro lens” attachments that enable good closeups (eg, the “Griffin Clarifi” case for the iPhone 3G).  Expensify also has an iPhone application (BlackBerry on the way!) to simplify this further.

These three rules are handy because they not only reduce opportunity for fraud, they’re actually the most convenient way for an employee to create expense reports.  It’s a true win/win situation: employers get better records, and employees create those records faster than they could have by hand.

To drive some of this home, let’s take a look at some of the most common forms of expense report fraud and show how these rules implicitly prevent it, without any extra work (and indeed less work) to any party:

  • Tip inflation. Write a small tip into the merchant copy of the receipt, and a large tip into the customer copy turned in for reimbursement.  Expensify Guaranteed eReceipts prevent this because they show the actual amount paid by the employee, not just what’s written on the receipt.
  • Taxis. Most taxis just give you a blank receipt at the end of the trip and it’s up to the employee to write in however much they spent. Paying by credit card produces a verified eReceipt.
  • Collusion. Where multiple employees share an expense (taxi, hotel room, internet, etc) but report it separately.  Again, paying by credit card and producing an eReceipt prevents this.
  • Duplication. It’s easy to copy a paper receipt and submit it in two separate expense reports.  Expensify only allows each expense (and corresponding eReceipt) to be added to a single report, implicitly preventing accidental or intention expense duplication.
  • Forgery. I won’t go so far as to link to any, but a quick search turn up countless services for creating authentic looking receipts for just about anything.  And what the services can’t do, Photoshop can.  Expensify Guaranteed eReceipts are verifiable — if there’s ever any doubt that the purchase is for real, we can trace it on command all the way back to the original electronic purchase recorded by the bank.

And so on.  Expensify helps you keep expenses in electronic form all the way from purchase to reimbursement.  Not only does this deter fraud and reduce error (which is equally important), it simplifies the lives of everyone involved.

Does this make sense, and do you agree?

- David Barrett (dbarrett@expensify.com)

You should follow us on Twitter at @expensify

I’ve never been hip to the latest social networks. Lurking within this astonishingly charming and modest exterior is a true introvert, so I’m as far outside the social networking target demographic as you can be. But one thing I do like is Expensify, and I want everybody to know it.

So when my buddy and trusted advisor Travis Kalanick suggested I start tweeting away my Expensiphilia (behold the birth of a new Googlenique word!) I was initially pretty skeptical: nobody follows me, because I never post there. And I’ve no interest in posting there because I don’t follow anybody else. The network effect cuts both ways, and it’s kept me out of one social network after the next.

But Travis is not to be underestimated, as he had a brilliant idea: find people complaining about expense reports on search.twitter.com, and then tell them about Expensify with an @reply. It’s so obvious, that couldn’t actually work… or could it?

It does. In fact, it works incredibly well. My data is early, but I find over 90% of users given a link in an @reply will click on it. After that it’s up to the website to convert those links to users, but the @reply technique works incredibly well.

Which makes me wonder: *why* does it work that well? I mean, I know Expensify is awesome. And I know *I’m* awesome. But if I could convince everybody of that in 140 characters or less with >90% success rate… well let’s say I’d have done a lot more dating.

On top of this, it makes me think “OMG, this is going to be so horribly abused.” I’ll admit, I’m new to the Twitter scene. But if this keeps being as effective as it seems to be, this is going to catch on like wildfire — opening a floodgate of spam.

So with this in mind, let me toss out some groundrules on not only how to be effective with this technique, but how to be a good citizen:

  1. Keep it personal. Only send messages from real people, to real people. Leave the faceless boxes on Google and maintain the social foundation of Twitter.
  2. Keep it timely. A huge benefit of Twitter is you can go straight the people who are experiencing the problem at that exact moment. Leave the huge backlog of past posters alone and stay focused on the present.
  3. Keep it relevant. The temptation is overwhelming to just blast this out to everybody. But resist that temptation and focus on the people who are actually calling out for your thing.

Basically, if you wouldn’t say it when standing next to them in line, don’t say it online.

So those are my thoughts on the matter. Granted, I’m a total newb here, so I could be way off. But I’m also trying to learn the ropes, so help me out. What do you think?

Update: I *knew* it was too good to be true. Turns out there’s a very good reason 100% of links posted to Twitter get clicked immediately: there are a host of bots that pounce on the link immediately! Ok, going to filter those guys out and see if that brings the data back into the sphere of reality.