Andrew: Hey, everyone, my name is Andrew Warner. I’m the founder of mixergy.com, home of the ambitious upstart. And I always think that I know about all the software companies that are out there. And obviously I accept that there are some that I don’t know about. But as a guy who trolls Product Hunt on a regular basis, who talks to entrepreneurs here in San Francisco all the time, who’s just kind of in the mix, I think I know all of them. And I was so surprised when my friends who founded LessAccounting told me that they sold their company to this other guy, to this other accounting software company, and I never heard of this other accounting software company.
In fact, one of the founders of LessAccounting pinged me and said, “Do you want to interview the founder?” I said, “Yeah, how don’t I know about . . . how big is this company?” They told me, I was shocked, and I want to have them on here. I want to have the founder on and that’s what we’re doing right now.
Uday Koorella is the founder of a company called Qount. They do accounting software, and I think that’s in a simplistic way of explaining it, but we’re going to get into detail about how they do it. And they have a good number of paying customers. They just acquired maybe not a competitor but a company in a similar space. And I’m fascinated by how he got there, how he did it.
This interview is sponsored by two great companies and I know because I founded one of them. The first is the company that will help you reach people using the chat apps that they love. It’s called Bot Academy. That’s the one that I created. And the second one is the one that’s getting me healthier. It’s called Athletic Greens. I’ll tell you more about them later on.
But first, Uday, welcome.
Uday: Great. How are you?
Andrew: Good. How many customers do you have at Qount?
Uday: Eleven hundred as of today and growing, which is great.
Andrew: How many of them are paying customers?
Uday: Everyone. Everyone is.
Andrew: Every single one of them?
Andrew: What do you guys charge for people to use your software?
Uday: The lowest of the bucket runs at $100 a month, and there are some that pay probably about $5,000 a month. So there’s a good range of customers ranging from $100 to $5,000 a month.
Andrew: So at $100, you guys are doing a minimum of $10,000 that’s minimum. Can you give me a sense of what the actual revenues are at the business?
Uday: We are in about a shade less than $3 million at this point of time.
Uday: Yeah, we’re cash flow positive.
Andrew: Cash flow positive. Okay. And how much outside funding do you have?
Uday: We’ve raised $1.4 million in outside funding through, basically, it’s been through angels. The first one was through friends and family and then the rest of it through angel funding.
Andrew: So here’s a reason why I think . . . it’s not just that I’m arrogant, it’s not just that I’m in this space, it’s that I invested in accounting software when I didn’t like the accounting options that were out there, and I thought I researched everything and I thought I knew what was out there. And I’m fascinated that you are out there doing so well. You’ve got your customer base, and as you said it’s growing. Let me understand how you discovered this opportunity. You were working for what company before this?
Uday: I was at Intuit before this, which has a lot of accounting as well as taxes.
Andrew: Yeah. They’re the number one maker of accounting software in the country, don’t you think?
Uday: Absolutely, great company.
Andrew: What did you do for them?
Uday: I was an architect and an engineering manager with them, so I was managing technology and architecture and things like those.
Andrew: And this was up until 2013. By 2013, I feel like QuickBooks had gone from this piece of software that was outdated because it needed to be on the desktop and it was very tough to have two people collaborating, to something that was online, in the cloud and more modern. What was the problem that you saw with QuickBooks that made you say, “I think I can go out on my own and start a different accounting software”?
Uday: So fundamentally I didn’t start off by I was venturing into accounting software. The journey started off was trying to build financial analytics. Analytics and big data is what my interest started off with, and I partnered with my co-founder whose background is, he’s a CPA and accounting expert, worked with the big four and he was running his own services company.
Andrew: Before you get to the co-founder, when you tell me you were thinking about analytics and big data, what do you mean by that?
Uday: So I was looking for building something where it could peek into your financial data as a company and then give you suggestions on how your company needs to run, or give you input, build some amount of analytics on top of the data that you had.
Andrew: What’s insight that I should be able to get?
Uday: For example, let us say you as a company if your cost of goods sold is too high or too low or hitting the margins, how do you project that or how do you predict what’s going to happen? Okay? How do you get insights into it? It’s not . . .
Andrew: And software can look into that, and that’s a basic piece of data that software can analyze, no problem. What’s something that’s more difficult that I would not obviously think I need, but if I hear about it I might be drawn to it?
Uday: Absolutely. Let’s say there were multiple correlations. If your business was pretty big and you had multiple projects underneath there or multiple locations and you wanted to find correlation of how a particular location was doing. If you wanted to drill down and understand how specific things were working, there was not a really easy way for you to put everything in an Excel sheet and know [inaudible 00:05:38].
Andrew: I see.
Uday: What we ventured was to get into getting this data out and throwing a bunch of dashboards at you so that it made it more clear and simpler for you to look at it.
Andrew: And so how did you understand that this was a problem the business owners had? Where did you get that?
Uday: So I talked to a lot of small businesses and did some [inaudible 00:06:03] ways and understood what they were doing.
Andrew: You mean, this was back when you were at Intuit.
Uday: Yes, yes.
Andrew: You were. So, on behalf of Intuit you were understanding this customer base and you saw a problem that Intuit didn’t solve naturally.
Uday: Didn’t solve naturally, yep.
Andrew: And so, at Intuit even you as an engineer, you were tasked with going and talking to customers or serving them and learning what their issues were?
Uday: Absolutely. Intuit is a great company. One of their biggest strengths I believe is the ability to take a lot of feedback from customers, understand your customer. Actually, there’s a Follow Me Office program where pretty much every employee goes to the customers they serve and understand what they’re doing.
Andrew: Wait. Every employee at Intuit will go . . . I’ve heard about this. I remember years before people knew what customer development was and understanding your customers and watch them. There were articles in The Wall Street Journal and other financial press about how Intuit’s founder was really big on having people go into the homes of their users and their offices and seeing how people use their software to understand problems and usability issues.
You’re saying that this was spread out to everyone in the company? You just would come . . . someone would come to my office and just sit here and watch me as I used an Intuit software?
Uday: Absolutely, pretty much.
Andrew: Was it weird for you to sit in someone’s office and just look over their shoulder?
Uday: To start off with because we’re not generally used to it. As people working for a company, you’re more silo, you’re more used to sitting at an office and doing your work rather than going out and doing it. Coming from where I came from my previous companies, that was new to me. But it’s something that fundamentally helps you understand your customer better. I believe Intuit does a great, great way of handling it.
Andrew: Got it. So, you were going into someone’s office, you were watching survey results, you were understanding the problem, and you said, “These people need to get a better handle on what’s going on in their businesses than they could possibly get from a spreadsheet or anything that we’re doing at QuickBooks.” Why didn’t you then go to management at QuickBooks and say, “You sent me out to someone’s home, you asked me to do surveys, here’s what I learned, let’s get on it.”
Uday: So it’s not as if the aha moment happened in a second. I said, “Hey, we need to build financial analytics.” As I was working at Intuit and doing multiple things, this was something at the back of my mind, and I was learning how to build products, how to build organizations, a lot of it because of great leadership at Intuit. I would actually call it going to school when you are at Intuit. You learn multiple things.
As I was learning those, my interest being doing something on my own. And then when I sat together and thought, “Which customer problem do I want to address?” The part of it was building financial analytics was the first problem that I thought.
Andrew: Got it. And then you had this friend who worked at the big accounting firms, who had this background where he already had started doing work, right? Did he start his own company at that point?
Uday: Yeah. He started his own company and grew to about 350 businesses that he was so servicing out of Dallas, Texas. So he had a heavy client mix.
Andrew: Doing what for them?
Uday: Bookkeeping, accounting, payroll, taxes. Pretty much as service organization that did all the back-office work for you.
Andrew: I see. For businesses. Was he using QuickBooks software?
Uday: He was pretty much using QuickBooks software.
Andrew: I see. You know what I did recently is? I wanted to get a handle on my personal finances. This guy, Syed Balkhi got in my head, the founder of OptinMonster and a bunch of other software. He’s so aware of all of his costs, he’s so proud of cutting cost. And I said, “You know what Andrew? Why do you always care about business expenses and revenues, but not enough about your personal expenses? Get into it.”
So I hired a bookkeeper to manage my personal expenses, and she happened to recommend QuickBooks and now we’re using QuickBooks together. And I noticed as soon as I signed up for QuickBooks, before I added her as my accountant/bookkeeper, they started recommending all these bookkeeping agencies. Is he or was he one of the agencies that was being recommended that way to anyone who was signing up for QuickBooks software? Is that where he got his customers?
Uday: Some of them I believe. But a lot of his customers came through referrals because of the way he ran his business and fundamentally, I believe most of his . . . the 350 customers that he was servicing at that point pretty much came through referrals.
Andrew: Okay. So he had all these customers, he had a business, why would he want to partner up with you?
Uday: Because he sat down and thought, “Hey, I’m running a service company,” but he was looking to expand his horizons, looking to do more, and because of his background and his knowledge in accounting always wanted to build something rather than purely running a service company.
A big part of that was saying, “Hey, we have a captive customer base of about 300 companies. Let’s start building a software. These would be the early adopters and then we can take it from there in terms of building out the software.”
Andrew: In addition too, he would get to run his current company, you guys would have a separate company together that you co-own, this would be a software company and would scale much better than a services business. That was the thinking.
Uday: That was the thinking to start off with, yep.
Andrew: Okay. What’s the first version? What did that look like?
Uday: The first version is we rolled out an analytics software called Big Half.
Andrew: Big Hat?
Uday: Big Half. Especially it is a curious name because you’re basically saying one half is bigger than the other, but that’s what it was called.
Andrew: Oh, Big Half, H-A-L-F.
Andrew: Yeah, I got it.
Uday: We rolled that out, rolled it to a few of the customers, you know, got some of the captive customers within our ecosystem to start using it. And we got a lot of learning from it once we rolled that out. Once we rolled it out to probably 10, 15 customers, we understood what was good about it, what was not so great about it, and we started to understand that if we took that out to market and only sold analytics software, financial analytics, to have small businesses adopt it, would be a challenge, because small businesses essentially were not looking for an ad-on analytics software.
Andrew: It’s so funny that they’re not, because for my website I would have an analytics software. For other parts of our business, I would want it. But you’re right, there’s nothing drawing me to have analytics software built on top of my accounting software. But then again if you told me the need, if you told me how I would solve a problem, I would want that.
Uday: Intuitively, that’s what it felt, but when we did the customer service or when we went to the customers that was not the resonating feedback. Most of them came back and said, “Maybe I’m not wanting to pay for it. It’s great. It’s great to have that information, it’s great to have that insight, but am I going to pay you $20 a month to get it?”
Andrew: Probably not. I see.
Uday: Off the cuff, probably it would be the first few customers. That was the feedback that . . .
Andrew: I get it. You know what? So I used Baremetrics for a long time and I loved it. What they did was analysis of straight payments to tell me what my churn was, what my monthly revenue was, how we’re trending, up or lower. It was really interesting, but it just gave me anxiety because it was nothing I could do about it.
Then there was this other company called ProfitWell that came out, that said, “We’re also going to give you this kind of analytics for free. But here’s what we’re going to do. We can also go and talk to, you know, programmatically to software, people who are canceling or whose credit cards expire and convert them back into customers again and we’ll only charge you a percentage of sales.” And that felt right. And that’s a set it and forget it profit. Well, every time it shows up on my accounting software, I see their expenses. If it’s high, I’m happy, if it’s low I’m sad, because they get a percentage of the money that they recover.
And so, you’re right. When it comes to finances, for some reason, we don’t just want . . . maybe not for some reason. We don’t just want the analysis, we want to know what to do and more importantly, we want money kicked back into our system from it. Okay. So you are seeing it. In retrospect, should you have talked to potential customers before you built Big Half or were you right to build something and taking it out to them? What do you think?
Uday: Actually, we didn’t spend too much of a cycle in trying to build it. We did it pretty fast, put it out there for 15 customers, got the learnings, went out and sought opinion of a lot more customers. The whole of the cycle lasted probably six to eight months overall. So it was good that we learned our lessons quick and fast and we got the pulse of where the market was going towards.
Andrew: Okay. All right. So then, you got that feedback. How did you know what to iterate to next? How did you know what the next version was going to be?
Uday: So we sat down, did some amount of strategizing on our core strands, what we had in hand and also where the entire finance and accounting industry was rolling out to. We realized that there were a lot of accounting softwares, obviously real big ones like QuickBooks, there was Xero, there was LessAccounting. A lot of accounting software were present.
And then the other end of the spectrum you had your accounting firms which were around the block. But what we noticed is they were, at the end of the day as a small business you would go and buy accounting software, you would also engage an accountant to work on your behalf, and at the end of the year probably you would also engage a tax accountant who would then do your taxes. A lot of time it was shoe box carrying between your accountants through the year and then taking stuff to your tax accountant. And then on top of it, we also wanted to still [inaudible 00:16:25] with the analytics piece, but not sell it in isolation.
So the big aha for us was, “Hey, what if we brought all of this together? Rather than being a software oriented company, what if we roll out a solution which comprises of a software, the services, and the analytics built on top of it.
Andrew: I see.
Uday: So in the accounting, we saw that the do-it-for-me model was prevalent. There was a change in how your accounting was perceived rather than him being a guy that’s keeping you compliant. Small businesses were looking for a true partner, a person that they could talk to, strategize, talk finances, get some amount of see if we’re [inaudible 00:17:13] so on and so forth.
Andrew: You know what? So that’s interesting because I invested in inDinero back when QuickBooks was a junkie desktop software. At least for me, everything was on the web. This was the one thing that I didn’t install in my computer and couldn’t collaborate on. inDinero started out as software competing with QuickBooks. They very quickly pivoted to, “We’ll do your accounting for you and we happened to have our own software.”
Bench took a similar approach. It seems like others, not Xero, not LessAccounting, but even LessAccounting had some, “We’ll do it for you to get you set up” services component. So interesting how many of them did that. I’m still kind of surprised. Why wouldn’t . . . I guess I know what it is. It’s accountants don’t want to learn new software. I can’t go to my bookkeeper and say, “I know you just studied QuickBooks, that’s what you’ve grown up on. You got to come and use this new thing that I’m using.” Right? That was a big issue too. They couldn’t keep their bookkeepers.
Uday: Absolutely. One was that, and two, the accountants are pretty much busy with what they do servicing their customers, and it’s not really easy for them to go hopping and adopting new accounting software, as well as trusting in new accounting software. Right? They’ll spend ages doing what they do in the software that they are comfortable with. And most of them stick to the software that they’re comfortable with.
Andrew: You know, one thing that I wonder when I see these guys, Bench, inDinero, why not say, “Okay, people prefer to have bookkeepers who they could have as strategy partners who do the work. We’ll just use Xero or we’ll use QuickBooks.” Why do you have to create your own software? It’s a tough thing to do to create your own software. Why do you have to do it? Why not say, “We’re going to use QuickBooks. Our thing that’s going to separate us is we have QuickBooks plus this extra analytic software, but we’re not going to reproduce QuickBooks. We’ll just accept it or accept Xero, and we’ll build on top of it”? And in many ways, I think Xero might be easier. Why?
Uday: Great question. Fundamentally, we sat down and gave this a big [inaudible 00:19:22] because like you said, building software or going through the iterations is not simple. If we wanted to have our own software because we could really customize it for the customer sake, a lot of times our customers come in and say, “Hey, I need this to be trapped within this software,” or, “Is this part of your accounting software?” We didn’t want to be in a place where we would have to then say, “No, let me switch my accounting software.”
One, we wanted to have more control and more customization. Two was, we wanted to hold the customer data within our ecosystem and software so that we could provide richer analytics as well as recommendations. So probably, you have your invoices raised through our software, it would be very easy for us to integrate with an invoice factoring system. Or you have all your financial data within us and with your permission we can expose it to the right partners that can probably give you a line of credit or either of them. So holding the data within our ecosystem was a fundamental driver as to why we needed to add our own software.
Andrew: Okay, right. Now, software for accounting, really intense, does so much, it does invoicing, it sucks in data from banks. Sometimes well sometimes not. It sucks in data from companies like Stripe, it gives reports, so much to do. I’m wondering what the first version looked like, but let me first take a moment and tell people why I’m always so charged up.
Here’s the thing guys. I used to drink soda. You might have even seen it in past interviews, earlier in 2017. You see me not just have my coffee, this is actually tea. But I would drink not just coffee, but also drink soda. And then the founder of Spartan Race saw me drink soda and he said he was going to kick my ass and I thought, “You know, whatever reason I needed for soda, it’s gone. I don’t need to do it anymore.” My kid was up at night when he was first born. He’s no longer a baby. He is now sleeping through the night, or at least I am. My wife can get up. That’s our agreement. I don’t need to do it.
So I cut the soda, but I realize cutting the soda is not enough. I want to also feel healthier. I want to feel great. And so someone on our team introduced me to Athletic Greens, and I said, what is it? What does it mean that on the packet it says it’s going to give me energy, health, body and . . . I don’t know. I’m the kind of person who just started looking online, I called them up, and talked to them and said, “Tell me more. What does it mean to have more energy?” And they told me how the ingredients in this actually give you more energy.
If you’ve ever eaten like vegetables which I do, I’m a vegetarian now, I eat a lot of salad. I know when I eat more salad, I feel more energized and more alive than when I used to eat meat all the time, right? There’s certain things that make you feel more energized, feel better. And so I switched to this packet and I actually did. I can’t say that this is like drinking soda where I drink it and I immediately feel energized.
I’m going to be totally honest with you. I don’t even know if it’s Athletic Greens that’s making me feel this energized, though if you listen to my earlier episodes, you might see that I’m more energized. I don’t know if it’s just that this is like the habit that then started better habits and got me back on target with my health. But I will tell you this, since I’ve been with Athletic Greens, I do feel healthier, I do feel better and I’m making better food decisions.
And so when I’m in my office, if I can either go out and get a pizza or eat healthier, I’m now eating healthier. If it’s I’m on the go, if it’s take one of these powder things, and one of their cups which I actually took home to wash the other day. I do that. That’s the idea here.
So I’m not promising miracles. I will tell you, go back and listen to my interviews from the beginning of 2017. Look at my interviews later on. I haven’t talked much about Athletic Greens, but I think this is part of it. Drinking healthier, reminding myself that I care about my health and having something that actually tastes good is a key part of it. So Athletic Greens makes that.
They also . . . I realize that I don’t get enough protein in my diet. I use something called My Fitness Pal to keep track of my calories all the time. That’s another thing I’m doing now. And I realize I’m not taking in enough protein and so they also have this protein chocolate shake. No meat in it, really ingredients that you can actually read and understand. Your kids will understand all the ingredients in this. I’m happy with it.
If you want to sign up and try it out, they’ve got a special URL where you can get a deal from them. Go to athletic . . . what is it? Athleticgreens.com/mixergy. You’re going to see not just my face on there but you’re going to see a few other people who you know, respect, who would not just allow their faces to be attached to any product, and they support this. They’ve been using this for a long time. Go to atheleticgreens.com/mixergy, you’re going to get 30% off your first order, athleticgreens.com/mixergy.
Do I feel energized? I feel more energized in you Uday, and I think it’s because you’re more of a laid back person and also maybe because I’m more comfortable being on camera. What do you think?
Uday: I think it’s a combination of both. One is typically, I’m laid back. Two, I’m 100% sure you’re more comfortable being on camera.
Andrew: Right. I’m like shot out of a cannon all the time. I have to chill out sometimes. This is why now my wife and I will go out on dates. My new thing is, we don’t sit down in a restaurant all the time. I’d much rather just take a drink, we take it in a glass and we go for a walk through the Mission District here in San Francisco. We go for a hike frankly in the dark and just go experience nature, have our drink, have our long conversation, and then we can go sit down for dinner or sit down for drinks. That’s my date tip. Do you have any date tips for me? What’s your date like?
Uday: Probably, laid back or a glass of wine.
Andrew: So it’s a glass of wine at a wine restaurant or wine bar?
Uday: Wine bar would be great.
Andrew: Okay. Are you in a relationship? Is that too personal to ask?
Uday: No, I’m married.
Andrew: You’re married. So you and your wife go out how often when you guys go out on a date?
Uday: Probably once a month.
Andrew: Once a month. That’s where we are right now too. I need to get like a regular weekly rhythm going.
Uday: Yep. That’s tough to keep up but I guess we need to keep that rhythm going.
Andrew: You know what? There’s a Mixergy fan who created something called Trusted, it’s an app, that lets you find really fanfrickintastic babysitters. I don’t know if I’m supposed to say it, but it’s good. I’ll say it. Hunter Walk has this group of entrepreneurs who are all dads who have kids roughly the same age, and I saw in this group people were saying, “How do you even find a good sitter?”
We all, as a consensus, agreed Trusted is the best place. I should just sign up on Trusted for an ongoing commitment to have a sitter come in every Saturday night and Olivia and I should go out. I need to set it and forget it. I’m a very systems oriented person. Are you?
Uday: I’d say 50 and 50. Not as much, but yeah.
Andrew: It’s strange because you’re more of the engineer and I’m much more anal. Okay. So how do you take this big opportunity that you see, someone needs to create software that does all this and started off? What did you do?
Uday: Sat down, white-board it, came up with the pieces of software that we can build and pieces of software that they would either integrate or partner with. Three areas where we said, “Hey, we’re not going to venture into it at this point.” One is payroll systems, one is payment gateways, and then finally taxes.
Andrew: And taxes.
Andrew: Can you give me those three again. I want to make sure that I understand. You said three areas you’re not going to get into are . . .
Uday: Taxes, payroll, and payment gateways.
Andrew: Taxes I understand, really complicated. It’s a whole other set of skills and people have their accountants do it. Payroll, I get too. It took me so long to find the right payroll service company. I know how much work is involved. But why not payment gateways? That’s the thing where if I get an order, it goes through the gateway, you guys automatically suck the data in and you keep track of it. Why didn’t you want to do that?
Uday: So, just to be clear on this. These were three areas that we didn’t want to build our own software. We wanted to partner with somebody else to do it.
Andrew: I see.
Uday: So payroll we partner . . . we still provide the service but we pretty much use something like Wagepoint to do it. Okay. Taxes, Intuit has great tax products. We use their products to do service.
Uday: Payment gateway, we partner with a great company called Payment Spring. It’s been . . .
Andrew: Payment Spring.
Uday: Payment Spring. It’s a phenomenal company and have some great software. But more importantly, great set of people, probably top notch customer service. So instead of building our own payment gateway, we wanted to [inaudible 00:28:10].
Andrew: And payment gateway would mean, I would use Payment Spring to collect credit cards from my users on my site and then that data would go to you. What if I have Stripe or one of the other payment gateways?
Uday: You could use those too, that’s probably . . . I had a preferred if you raised your invoice through our application, though Qount, the default is to go through Payment Spring to collect your payments.
Andrew: I see.
Uday: But if you had a Stripe account or a PayPal account, we integrate with those too.
Andrew: Okay. But that still leaves a whole lot of work to do. Just sucking in data from the banks can be a nightmare. I watched some of your competitors figure it out and it took them a long time. How did you get all of that first version built out and how long did it take you?
Uday: Probably about the first six to eight months heads down, built a fabulous team obviously. You know, to roll out software of any magnitude you need a great team. So built a team and the first six to eight months heads down doing nothing except building the product. It took about eight months to do that. And while doing that, of course, we were still running our services organization, we had our customers that we had to service. So the services team was still doing work for them while we were building the product.
Andrew: Okay. But was it your services team or was it your partners? Because he had the company first.
Uday: Yep. It was my partner, but by this time we rolled everything under one umbrella. The Qount umbrella pretty much has everything. It’s got product and services, everything rolled into one.
Andrew: At that point did you start talking to customers and saying to them, “If we build this piece of software, will you switch to ours away from the software you’re using now for accounting”?
Uday: Absolutely. That was the first question. So we reached out to everybody within our ecosystem to say, “Hey, is software more important to you or getting this done? What are you looking for? Are you . . . ” And it’s very easy to understand if they’re sticking to us because of the service we provide or because of the software. And the resonating thing was, “Hey, you guys are doing a great job. Whatever software you build and we’re going to roll into it as long as it does everything that it is doing for us today.”
Andrew: And so what were they saying that would take it for them to switch over? Because I think that would be a scary thing for you to ask me. Do you want to switch accounting software? I would think, “I’d rather not. You have to really make it compelling for me to do it.”
Uday: To an extent, true, if you did things yourself. But let’s say you are backed with an accounting team and they told you, “Hey, we believe in this software and we’re going to roll you into it.” I’m sure your degree of confidence would go a lot higher.
Andrew: Right. It’s true.
Uday: If you were using an accounting software and you had to switch, yes, I see why you would have probably two thoughts about it. But if I gave you an accountant and said, “Hey, the accountant is the one that runs everything in your software. He’s using X right now. Would you switch to Y?” I think that’s a pretty straightforward decision.
Andrew: Okay. Yeah. I think I might ask, “Why do you want to make the switch?” and I could see that they would tell me, “We get more control over the books so we can get you better data.” And then the second question I would ask is, if I wanted to switch out, how hard would that be? Was that a question that people came up with?
Uday: That was absolutely a question. I mean, because these softwares have existed forever, so what happens if we have to leave? How tough is it? As well as, if we had to move data into your ecosystem, how simple is it to have five years’ worth of data laying somewhere else. How do I move in? So the moving in and the moving out part is probably the first challenge that we solved. If for us to be able to get customers into our software from other software that we were using, as well as to allow them to do the switch.
Andrew: Okay. Easy in and out. The first set of customers came from the services business, right? You already had these clients, you asked them if they would switch, they said that they would switch, and you moved them over. How many of them moved over? I think you guys had 300 at the time. How many moved?
Uday: We went through a rolling phase. Probably we chose about 20 of them and started moving 20 each at a time, so that we learned our software better, any issues or anything that cropped up within those, we would have a chance to fix and rectify and so on and so forth. So after the eight month phase where we built out the project, we started taking 20 each and rolling them probably every month. That’s what we did till we started to roll all of them into this.
Andrew: Okay. All right. Now your partner had what he was looking for. He had a services business but also software that allowed him to grow beyond services. You told our producer, “We also reached outside of our ecosystem. We didn’t just want to understand our specific clients’ pain, we wanted to understand others.” When you talk to people outside of your ecosystem, what did you learn that you didn’t know by talking to your current customers?”
Uday: With current customers, since they have experienced the service aspect, it’s easy for them to say, “Hey, you’re servicing us, let’s do it.” Right? It’s much easier to convince them. There is no sale angle to it as such. It’s more of a, we’re doing X, we’re going to go Y, we’re going to make sure that everything that you have here, we’re going to provide there too.
When we started reaching our new customers that were not within our ecosystem and there was a sales angle to it, right? “Hey, we’re comfortable with our accountant who uses QuickBooks. We’re comfortable with our accountant using Xero. This is a newer software. How do you justify it?” Right?
Andrew: So, it is a harder thing to do. How did you convince . . . I get that you have these clients who are already working with your accountants. Your accountant says, “If we switch to this new software, will you switch?” I can see how they’d say, “All right, whatever you guys say. We’ll go with it as long as we can undo it.” When you go to people outside, you don’t have that power. So what was it that you knew would convince them to switch over once this thing was done?
Uday: One was total cost of ownership, because we realized that most of them were paying for software, for an accountant and a tax accountant at the end of the year, right? Cumulatively if we put together and the fact that it was more of a monthly subscription is how we charge people. The total cost of ownership was significantly lower. That was one.
B, the aspect of it is now we could double down on the analytics and the insights because that was an add-on to what they were buying as opposed to them paying for it on the site. Now we could say, “Hey, we’re not only take care of your business end to end, we are more strategic. It’s not an organization that keeps you compliant. We can give you great insights. And you know what? We provide you completely great analytics on top of this.” So that became additional add-on rather than selling analytics to small businesses.
And then the third big component of it was in terms of talking to them and look at the collaboration aspect. A lot of small businesses struggle when they had to collaborate with their corner block accountant in terms of the amount of time they had to spend or the emails they had to send out, or so on and so forth. Since this was more of a software based company, they saw the value because all the collaboration happens in app. They ask us questions through the app or through their mobile phones. They can pretty much scan their receipts or bills or any of those.
So all of it, probably, they were saving a lot of time. So there was a time component, ease of use, pretty much they could . . . it’s as good as sending a Facebook message. They hit us up and say, “Hey, can I get a good standing letter?” And you have one of our bookkeepers who answers that and sends it on the way. They could pretty much ask, “What’s my gross profit margin?” and one of our bots reply’s to that chat. So given that the collaboration was easier, the total cost of ownership was lower and the fact that we were providing more than what a typical accounting firm would do, that’s what we realized was selling.
Andrew: Okay. So you’re starting to get customers from your network, you’re starting to understand what people outside of your current client base would want. You then say to our producer, that one thing that helped you get more customers was helping customers keep their accounting compliant. And I looked at this in my notes and I didn’t understand what you guys meant by that.
Uday: What I meant is, you know, a lot of customers, one of their biggest pain points when they want to switch over is getting the agile data of the last four or five years, making sure all of that is imported and transferred. Even if you had to switch an accountant, how do you make sure that everything that the old firm did for you is transferred over? Right?
Again, because this was a software back thing, you didn’t have to carry your shoe boxes full of notes or your documents. Pretty much we could get all of that data from your current software. That was a big pull aspect because a big part of what we said is, “Hey, everything that you have thus far for your company, we want to make sure that we get it into this ecosystem.”
Andrew: Okay. I’m going to ask you something. Do you feel like excited to be in accounting software? And if you were a kid looking at your life, would you say, “When I grow up I want to be in accounting software”?
Uday: Right now, yes, because it is going through, for lack of a better word, I think we’re turning a corner where a lot of software became do-it-yourself about a decade back or two decades back. People moved towards that more. But if you look at a lot of areas now, again, they’re going through do-it-for-me transformation that is because you’re passionate about your business, you’re good at what you do, but you want certain things to be taken care off, right?
But you want that interaction to happen through a software. Example is, Uber probably is the greatest example of that. So accounting is going through that transformation where every accounting firm is probably reinventing itself.
Andrew: I see.
Uday: At this point I believe it’s a really exciting time to be in accounting software, but more than accounting software, the companies that you cited, the inDineros of the world, the Benches of the world, I think there’s one more [inaudible 00:39:05] is roughly around there and us. The model that is chosen is we’re not only providing software but we’re coupling that with very rich services. So you could rival very good accounting firms and services and build a software that is as good as any out there. The combination I think is what’s exciting at this point of time.
Andrew: I get that. You’re right. It used to be that people were scared of services, that software was going to be the thing that killed jobs and we don’t want to do any services. We don’t even want to answer customer service questions or talk to potential customers because if we do, it means our website isn’t doing a good job, it means our landing page is bad, it means our sales page isn’t convincing people, it means we don’t have the right trial.
But now I’m noticing more and more that humans are being added into the mix, everything from demos, which I know you guys do, to actually doing the work, and you gave a few examples of companies that do that, like Uber. But I think accounting is a really great example of that.
All right. Let me take a moment here to talk about my business here, which I’m going to sponsor Mixergy myself here right now. And I’d love your feedback on this. So here’s the thing that I noticed. Uday, I realized a while back that email was not very effective for us. It used to be the most effective thing. I send an email we get 25%, 40% of people open, 20% would click on those emails, we get them on the site, we get a bunch of orders, and it just wasn’t as powerful as it used to be.
At the same time I noticed that when I talk to my team about our email that’s going out to the audience, I was using Facebook Messenger to talk to them, iMessage for chat, we today use Ping as part of BaseCamp which is also a messaging app. When I talk to my wife, I don’t email her anymore. We never email anymore unless something is not that important or she wants me to print something at the office. We use iMessage, we chat with each other.
And I said, there’s a shift here and my business didn’t catch up with it. And the shift is that we’re using chat more and more often and email less frequently. What if instead of using email to reach my audience, I use chat. And so we tried it and we got 80% open rates, we got 50% plus click rates. And more than that, people actually liked it. When was the last time someone sent you an email saying, “I love getting email,” or called you or talked to you? It doesn’t happen.
And so I thought, how do we reach customers using chat? And I discovered that you can do it if you build a chat bot. So I started building chat bots, and then I built this company where we teach people how to create chat bots. And I’m noticing that more and more of those people who learn from us are now creating agencies where they’re building chat bots for clients. In fact, some of them are now starting to hire and staff up.
And so if anyone out there wants to see what a chat bot is and maybe even come to one of the webinars where I demo it, I’d love for you to come on. The company name is called Bot Academy. There’s a URL where you can try one of the chat bots so you can see what it’s like to get messages from us and what it would be like if you created a similar campaign for yourself. Just go to botacademy.com/mixergy, and you could try one of our bots and be invited to our webinar where I will show you how to create a chat bot yourself.
In addition to that, Uday, one of the things that I do is we have an agency too, where if someone just wants to pay and say, “I don’t want to learn. I want to pay you to build a chat bot.” We’ll say, “Well, we’ll take the money but then we’ll pass it on to one of our graduates and have the graduate do the bot.” Let me ask you this. As a guy who’s in the services space, what can I learn about how to do this business well?
Like one thing I learned was, the sales page cannot just sell on its own. People want to talk to a human being before that human being creates a chat bot. Now, if someone wants to hire us, we say, “Call or schedule a demo.” What else can I learn about how to sell services?
Uday: I believe customer service. I believe that should be number one priority.
Andrew: Meaning more and more ability for our clients and potential customers to talk to a human being.
Uday: Absolutely. And not only talk from the ability to sell, but also somehow incorporate advice into it. So a lot of people who come on probably they’re not trying to buy it today, but if you provide an ability to . . . they come, they talk to you, they white-board with you, probably they’re going to leave today, but, you know, at some point they’re going to come back.
Andrew: I see.
Uday: So it needs to be richer than just a person that you’re talking to, to finish your sales process.
Andrew: I see. So it wouldn’t be contact us if you’re interested in buying, but instead it should be contact us if you want to personal demo of how these chat bots could help your business.
Uday: Yep, absolutely.
Andrew: Okay. You know what? I’m on your site right now. I noticed that you guys use Drift to bring up a chat window. What happens? Why Drift? And how does that help you close sales?
Uday: We were looking for something that people could chat with us on a quick basis and we could also use it as our backend CRM to store the contacts and the ability for us to reach out to them at a later stage. That’s how we started using Drift.
Andrew: What does Drift allow you to do that, say, Intercom doesn’t allow you to do or any of the other tools doesn’t allow you to do?
Uday: I think pretty much it’s in line with what Intercom does or I believe HubSpot has their own messenger at this point of time. I think HubSpot and Drift are very, very similar in what they . . .
Andrew: That’s funny, because Drift was founded by the guy who created HubSpot software.
Uday: Absolutely, absolutely.
Andrew: The one thing that I heard that Drift does is, at least they’re trying to do is, help you qualify people. So if someone comes to your site and starts talking to you, you guys have Becky Jones as the customer service rep. Becky Jones should know whether that person is likely to buy or not, right? Do they do that for you? Does that help?
Uday: To an extent. I think that’s where you refer to HubSpot, so I’ll go off that tangent. I think HubSpot does a great . . .
Andrew: HubSpot does. They tell you not just someone’s here to chat with you, but, “Hey, someone’s here to chat with you and they’re likely to be a really good customer for you.”
Uday: Absolutely. You could use HubSpot to track which pages of your website they have been on, what they have been seeing, what’s their frequency of visiting, as well as what’s the potential of converting them. So I think HubSpot does a great job of doing that.
Andrew: Okay. But you guys don’t even use that feature, at this point you just want anyone who wants to chat with you to be able to quickly initiate a chat and then ask questions.
Uday: Absolutely. So we wanted it to be like, I said, not something that was sales oriented. We want people to talk to us, and that’s why a lot of our call to actions are talk to an expert.
Andrew: I see that.
Uday: Pretty much not even looking to accounting software, but if you had a question, “Hey, I’m looking to incorporate a company in Delaware, how do I do it?” We are more than happy to talk to people, give them advice or have an expert talk to them, even if they were not going to adopt our solution.
Andrew: So if I come to your site, I click the button to talk to an expert, I’m taken to . . . this is another Drift tool that allows me to schedule time with Becky Jones by picking an available time on her calendar. I could just say to her, “Should I do an LLC or do a C-Corp?” and she’ll answer?
Uday: If it is a very simple question, she would answer, or you can set up time, a 15 minute or 30 minute conversation and we would have one of our finance experts hop onto the call and talk to you about it.
Andrew: Is that expensive to have someone who’s enough of an expert that they could answer questions like that, get on a call and at the same time, you know, close a sale and you guys aren’t charging that much? How do you do that?
Uday: One of the things we realized is most of the questions are pretty straightforward. It’s just that people find it more [inaudible 00:47:09] and more probably comforting when they talk to somebody rather than Google and find the answers. Most of them pretty much know the answer in the ballpark, but having somebody who is in that arena answer that question is comforting. And we’ve found that a lot of people who come to us and ask these at some point whether it’s their books, their payroll or so on and so forth, tend to that at some point in the future.
So it’s more often, for lack of a better word, an investment up front. You’re putting your experts out there, you’re asking them to talk to people, you know that at some point the next time there is a need, you’re going to get that first call in terms of saying, “Hey, I spoke to these guys. They talked to me about, how should I open mail and see now that I have it and it’s up and running and I want my books done or I want my payroll run,” we’re sure that we’re going to get that first caller a first chance to service them. So that’s what we’re going off of.
Andrew: I see. Okay. That’s a thing that I’ve got to just get my head around to. How do you hire someone who can be there who’s strong enough and at the same time not cost so much that you’re losing money by just offering free help?
Uday: Yeah. As of with every business that’s the tricky aspect, right? How do you manage your top line? How do you manage your bottom line and your expenses? But also you need to weave into it is the fact that, “Hey, what I’m doing, how does it strategically align with where I’m trying to get to?”
Andrew: One of the things you told our producer is the challenge for you as an entrepreneur is to be patient. You said, patience . . . and I love this phrase. You said, “Patience is very anti-entrepreneurial,” because entrepreneurs just need to run, run, run. I talk a mile a minute sometimes because I don’t have patience. Why is that an issue for you in business?
Uday: Because accountants and accounting software is not impulse buy. You don’t look at an ad or a Facebook ad or a sticker somewhere and say, “Hey, I’m going to jump onto this accountant and I’m going to use this guy to do my accounting.” In the line of . . . in this sector of business that we are in patience is a big deal. So, like I said, it’s about talking to people, giving them fundamentally good advice whether or not they’re going to adopt your solutions or service at this point.
And then, over the long run believing in the processes that you have set, and the framework that you have set, and the fact that trusting that you’re providing enough value to anybody who is a customer. And by customer, it doesn’t have to be a paying customer, anybody that’s knocking your chat window or sending you an email, you believing that you’re providing them value and believing that they would turn out to be great customers in the long run. So that’s where I think the patience aspect especially in selling accounting software and accounting services comes into play.
Andrew: I want to ask you about why you bought LessCounting, how you bought them because I know the agency that you guys used. But I’ve got to just make sure that I understand one other thing. Customers, I get a little bit of how you got customers, but it still doesn’t . . . I still don’t understand how you went from the 300 who were clients of your services business to 1,100 today. What’s one big thing that worked for you? Of all the things that you’ve tried, what’s the biggest?
Uday: Biggest is reaching out to every of our customer and getting a lot of reference. That was one.
Andrew: Just manually calling up a customer, “How are we doing for you? Things are going great. Hey, do you happen to know any other business owners who could . . . ” What’s your process for doing that?
Uday: It is having a sales team that reaches out pretty much . . . cross-selling has been our biggest way of acquiring customers, and that’s where I’ll talk a little bit about LessAccounting too. We realized that while the software and service model was great and that’s where a majority of our target segment would be, there were a lot of micro businesses that today did not require services at all, right?
You’re a bakery at the end of the street or you’re running a laundromat, probably you don’t need services today, right? Or you are a startup that started out today, you’re one employee, you’re two employees, you just need software that day. And in that segment, we saw that LessAccounting was as good as anything that was out there in the micro SMB market.
Andrew: I see. You’re saying, look, there are people who are using LessAccounting they definitely are not at a point or mostly aren’t at a point where they need an accountant, that’s why they’re using LessAccounting by themselves. They need something simple, do-it-yourself. You thought, “If we acquire them, as soon as somebody gets close enough to need an accountant, we want to jump in there, talk to them and let them know that when they are ready to hit that mark, we got software that’s part of LessAccounting, natural transition.” That’s what you were thinking.
Uday: Absolutely. That’s what we did. So we went ahead and acquired LessAccounting. It gave us exposure to a lot of micro small businesses. And through having constant conversation with them, keeping at it, you know which one of them are at the cusp and then anybody that is willing to migrate to say, “Hey, I like the software but we’ve out-grown it. It’s frustrating for me to keep doing this day in and day out.”
So anybody who says, “I have a lot to do and this is probably not what I want to do.” Now I say, “Well, now we have this other thing where, you know, it’s not really software but we have our experts do it. Why don’t you migrate? And you’re paying now for the software, you would pay for the software and the service. This is your total cost of ownership.”
So the ability to migrate a few of them from LessAccounting helped in not only moving the numbers, and that was probably one of the things that gave us a rapid upstart into getting customers. And then you would have people who would use accounting software but went somewhere else to get their taxes done. We would call them and say, “Hey, we can do your taxes. We’re doing your accounting, we would do your taxes,” so on and so forth. So the cross fit . . .
Andrew: And then you refer that out to someone else or you guys are doing taxes now?
Uday: We do taxes, yeah.
Andrew: You do taxes. You know, one of the thing that I like that you’ve . . .
Uday: Our service company already did taxes.
Uday: Our services company, when it started out, always did taxes. So it’s just that we don’t use our own software to do taxes.
Andrew: I get it. Okay, I see that. I also like that you guys have a CFO functionality. I was talking to inDinero, I said, “People need more help, someone to do more than just look at the books, but say, ‘This is some advice for how you can improve your business. Here are a couple of ideas for where you’re missing out on costs. We’ve studied all these other businesses. We can bring you some of that knowledge.'” And I know that you guys do that. Before you acquired LessAccounting, did you have a partnership with them where they were feeding you potential customers for FE?
Uday: No. Actually, we started off by talking to Alan, a great guy, probably one of my favorite entrepreneurs that are out there. So I talked to him, he was . . . [inaudible 00:54:23] everything branded a lot of things, LessAccounting was one of it. It’s great where they got LessAccounting too, given that they were more software engineers that set out, they understood the pain points and built a software. We talked to him, we understood where LessAccounting was and, you know, it looked like something that we would be interested in acquiring. Those conversations happened and we went ahead and acquired it.
Andrew: Why go through an agency? You went through FE International. You know what? I like the company a lot, but one thing I think they should change is the name, FE. No one’s going to really remember. I kept Googling them. I said, “How can I not find their domain?” Because I was typing in FT International. I’ve known them forever. You know what I’m talking about, right?
Uday: Absolutely. But hey, those guys help a lot in terms of the fundamental paperwork that’s required to do something like this, the bunches and hordes of data that you need, any of the help that you need in terms of understanding. Buying something like that takes a lot of time, as well as a lot of decision points, and then a lot of conversations. I think FE was wonderful in facilitating all of that and it was a great experience.
Andrew: How much did you pay for LessAccounting?
Uday: I guess, in the interest of keeping that not open, I think Alan wouldn’t want me to say.
Andrew: Are we talking about over under a million?
Uday: I’d say about a million.
Andrew: Okay. Wow. It’s fantastic that those guys are able to do that well. So then, what else helped you grow before LessAccounting? And that, by the way, is a great idea. Find a company that has customers that are at some point going to be ready to be your customers, acquire them or maybe even partner with them, and work out a way to transition from that software to yours. I totally, get it. I think we should be thinking that way too.
What else then before you acquired LessAccounting allowed you to grow? Because you were grown before them. So you had referrals from a sales department, you had your current people. Was there anything else? You guys don’t do a lot of content marketing, you barely have any traffic, I couldn’t find any referrals. Most of your traffic comes directly to you, they’re not even coming from Google searches. What else worked for you?
Uday: So content and traffic optimization, is something that we’ve started over the last three to four months, very, very young and probably very early in that. And usually what we realized is that thing takes time. It doesn’t . . . it takes a lot of time to build, and if you’re on the flipside, if you look at LessAccounting, it’s great. It’s got a lot of people reaching out to it. It’s very, very organic traffic that comes through.
So we realize that since that aspect takes time, we wanted to invest in it, but did not want that to be the sole channel where we would reach customers out. So we reached out to a lot of CFOs here that were part-time CFOs, our CFOs within the companies to say, “Hey, we provide CFOs services but we know this company that provides accounting services.” And, you know, we built that CFO network that reached out and recommended us. So now that it was coming through authentic sources, it made it easier to acquire customers.
Andrew: Okay. All right. I get that. All right. You built something really impressive. I’m glad to hear how you did it. I’m impressed by how far you’ve come with it. The company name is Qount, but it’s spelled with Q. Q-O-U-N-T, qount.io. How’s that domain for you? I’m a little scared for you with that domain.
Uday: With the .io extension or?
Andrew: The .io and the Q. Q-O-U-N-T alone is something that people have to remember, now they have to remember the Q instead of C in the beginning and the io instead of .com at the end. What do you make of that?
Uday: It’s been good thus far, but I agree, it’s slightly challenging. But we also wanted a synthetic name rather than accounting and counting. You know, that’s the direction we went, but we wanted to have it synthetic, so we went with the Q, pretty much that feel in terms of how we went with it.
Andrew: Well, you’re in luck because no one’s using count.com. Let me see. I’m doing the Whois search on it. I don’t know if you know whois.com. I’m checking it out. It’s a Chinese company that has the domain. I got to believe, they’re willing to sell, but I also believe that you probably tried to reach out to them, right?
Andrew: You shouldn’t reach out. Did you reach out directly, or did you have a friend reach out?
Uday: No way, ever.
Andrew: All right. How much are they asking for the domain?
Uday: They never got back.
Andrew: Oh, they never got back to you even?
Andrew: And I’ve got a phone number for them. You tried calling them, I’m sure. I’m more gung ho about this than you are. I love Whois. We had this software that we were using, I won’t call them out, frankly because I can’t remember their name. They had the name that I can’t remember. But we liked the software, we weren’t getting tech support. No one on the team could get tech support. They said, “Hey, Andrew, I think we got to kick it back to you. Maybe you could figure out what to do.” I’ll tell you exactly what I did. I went to whois.com, I typed in their domain, I found out who the owner was. I got his email address, I got his phone number and I got his like mailing address which I’m not going to use. I immediately fired off a text message. No response.
Now, I sent another one saying, “Hey, I got to call you. It’s really important. I know you must be busy. Google me. I’m a legitimate person. I want to talk to you.” Still no response. I couldn’t make his . . . I couldn’t get him on the phone using his phone number. I’m on an iPhone. This is how annoying I am with this stuff. I mess . . . no, I FaceTime audio him. Still no response. He sends me immediately to voicemail. I friend him on Twitter. Now all this is very soft. I’m not like being aggressive. I’m being persistent.
Finally, he called me back and I said, “Look, I promise this is important. I wouldn’t just waste your time but it’s something kind of urgent.” He finally calls me back, we get on a call, we fix the problem right away. I’m a hero to my team because not only did we fix it, but he’s helping me fix it, and then they also responded to all the customer support issues that we had. I fricking love Whois. And you can do Whois searches on a lot of different sites. I just use whois.com because it happens to be easy.
So anyway, that’s why I’m kind of like hopped up for you. I want to just call up this Chinese company and talk to them, Lu Kuan Jiang is who I want to talk to. But you probably have this figured out.
Uday: Let’s see how it goes.
Andrew: All right. Let me just say this. Apart from my little rant here, I’m really excited to get to know you. I love the people behind LessAccounting for a long time and I’m proud to see that they sold out to such a great partnership, such a good company. All right. Thank you for being on here and thank you all for being a part of this.
Remember my two sponsors are the company that helped me feel this energized and shot out of a cannon, it’s called Athletic Greens. I’m not actually going to attribute everything to them, frankly. I’m kind of an energetic person anyway, but Athletic Greens is helping me and I’m going to be open about that. It’s athleticgreens.com/mixergy.
And if you want to check out my chat bot and see what it’s like to actually market in the future, not email, but via chat, go check out botacademy.com/mixergy. You can always cancel or leave if you’re not into it, but my guess is you’re probably going to be one of those people who pesters me by calling me up on my Whois number to say, “Andrew, how did you set it up? I want to know.” I’ll show you. Go to botacademy.com/mixergy.
All right, Uday. Good talking to you, man.
Uday: Good talking to you. All the best with what you’re doing and hopefully your chat bots take over the world.
Andrew: They will. Thanks. Bye.