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Andrew Warner: [00:00:00] This founder had human beings do the work of ai. Humans answered questions, uploaded files, organized financial data. It helped to raise $20 [00:00:09] million for an AI based accounting software company. Copy her approach. Helen Hastings is the founder of Quanta Accounting Software that works fast because [00:00:18] it uses a combination of humans and AI backed software.
The next new thing, Helen, the interesting thing about you [00:00:27] is that you basically had humans do AI in the beginning. How did you do it? Gimme an example of something that a human being did then that today AI is doing because you [00:00:36] noticed it back then.
Helen Hastings: So we saw people just reading a lot of human written text is the biggest example of where AI has made a difference.
So, [00:00:45] um, imagine you have purchased something with a corporate card or maybe you need a reimbursement. You have to put a, a memo on that into your company’s [00:00:54] expense. System. So that’s just human written language and this is something that bookkeepers were reading and then figuring out what it meant. And LMS are, are very good at [00:01:03] that.
People think that, uh, accounting is just numbers actually. So much of it is just understanding what’s going on in the business. And so much of that is actually human written text. So the
Andrew Warner: example that you’ve given me [00:01:12] before was you said, look. There would be a human being that would see a bill come in from Amazon and analyze it and say, this is not an Amazon purchase.
It’s an AWS [00:01:21] purchase. It’s still the same company, but clearly those are two different buckets of expenses. And a human being would analyze it and then do it in the beginning. Right. And then [00:01:30] eventually it was actual, uh, um, LLMs that we’re doing that kind of analysis.
Helen Hastings: Yeah, e exactly. So one reason that traditional [00:01:39] bookkeeping tends to be so, uh, uh, painful is that it’s often outsourced to, uh, people that are maybe overseas.
And, [00:01:48] um, yeah, they, they, they’re great, but they just don’t have the context of what are software businesses doing and what are the vendors that they’re using, so they won’t really actually understand the difference [00:01:57] between, I used Amazon to buy the coffee maker. And this is my AWS bill, and that’s even a company that’s been around for a long [00:02:06] time, AWS, but they can’t keep up with the very new vendors as well.
So when, uh, with qu inherit books from other providers, we [00:02:15] see all of these things miscategorized, and it’s actually very simple for us to, to get that understanding based on what we see as the memos and what we see as the [00:02:24] receipt content and invoice content.
Andrew Warner: Okay, so let’s go back to even before you were doing this all by hand, as soon as you had the idea that you wanted to do this, you [00:02:33] decided I’m gonna go and shadow companies.
Who did you shadow?
Helen Hastings: Um, it was really, uh, a, a wide range of just bookkeeping [00:02:42] firms and, uh, bookkeepers that were working with a wide variety of, of companies. So, like, for example, someone who did a lot of bookkeeping [00:02:51] for like, truckers, uh, and like one proprietors as well as firms that were working with venture backed software, uh, companies, uh, as well.[00:03:00]
Andrew Warner: So they just let you walk in and look at how they were doing their books so that you could create a software company that would do what they do.
Helen Hastings: Uh, [00:03:09] not, not quite. This is very much user research phase and, you know, a a lot of these, um, companies are, are, they’re looking for better software too. So [00:03:18] they’re, they’re looking to work, uh, with, with, uh, people like me who are interested in coming and saying, Hey, I want to build software here to, to make everyone’s lives [00:03:27] better.
Okay. So it’s, uh. Silicon Valley tends to be just a, a very open place also. It really is. And, uh, it’s one thing I really like about that is, [00:03:36] uh, I mean, I chat with competitors and, uh, people believe in just the more we share the, the more everyone will, uh, learn and get better.
Andrew Warner: You know [00:03:45] what? That actually is a great point.
I don’t see this happening in the way that you experience it in many other cities where you can just go in and say, can I watch what you’re doing? Can we talk as competitors? Can [00:03:54] we have lunch? Can you introduce me to people? Okay. So you said I’m building this and I’m assuming also your background from Stanford to Google to NerdWallet to a [00:04:03] firm.
I’m assuming all that background gave you the legitimacy and the credibility for them to invite you in. What are some of the things that you noticed when you were shadowing these accounting [00:04:12] firms?
Helen Hastings: Um, and, and yeah, the background. I, I feel, uh, it was definitely helpful and I feel very lucky that so many people were just [00:04:21] willing to talk to me in the, the user research phase of, mm-hmm.
Of starting Quanta. I was just full-time going through LinkedIn, looking for, uh, [00:04:30] finance managers, accounting managers, accountants to talk to and learn from and just ask for favors repeatedly, and it. It was hard at the [00:04:39] beginning, but uh, once I got in the groove of it, it, it made, uh, it, I really don’t know how I would’ve started this company if I hadn’t done that.
So people, yes, they [00:04:48] do see the background and that’s helpful and I think I would recommend to a lot of founders out there, just, just do that, just do all that user research and [00:04:57] to answer your, but it was cold.
Andrew Warner: It was cold messages on LinkedIn and cold emails, and I’m assuming also some friendly introductions and that’s how you got meetings.
Helen Hastings: It started [00:05:06] with warm, so it would be searching on LinkedIn. Here’s the title that I want to talk to. Yeah. And then seeing do I have any mutuals with, with this person? Mm-hmm. Uh, [00:05:15] LinkedIn is great for that. And then reaching out to the mutuals and saying, Hey, I see you’re connected to X. Can you please connect me?
And, and they often would because I, I knew them [00:05:24] and I’d worked with them, uh, in, in my career. And when then when I had that call with the person I said. Who should I talk to next? Who, who do you [00:05:33] recommend? And then that is how I ended up talking with, with different firms and, and people doing this work, um, in reality.
And it, it just, uh, it, it compounds. The more [00:05:42] people you talk to, the, the more you meet. And that is how I got all the learnings that I really needed to, to start this company.
Andrew Warner: All right. Before we started recording, you told me about some of the [00:05:51] manual things that you saw that you said, wait a minute, software could really do this, humans should not.
What are some of those things? Yeah,
Helen Hastings: I think the, uh, the biggest example is just how much time is [00:06:00] spent logging into a financial tool, downloading some sort of data, massaging it, and then uploading it into a traditional accounting system that [00:06:09] is so much of what, uh, bookkeepers are, are doing today. And there’s just even, sorry to interrupt, even plaid.
So plaid [00:06:18] isn’t a hundred percent accurate. I will say that we use a mix of plaid and ity and other tools, and the, but the best is when companies have APIs where [00:06:27] the data’s coming in. Well, the, the reason that plaid isn’t enough is that there’s always small things that are missing and there often isn’t enough data to really understand [00:06:36] what was that, that bank transaction needs to be augmented by a receipt or some sort of um, uh, understanding.
And, uh, we [00:06:45] would often inherit books or see books where, yes, there was a plaid connection, but the, the data was just off. And, uh, we have just built this really great understanding [00:06:54] of all these different banks and we’ve been able to augment it. And yes, a lot of bookkeepers would just end up saying, we have to go and log in, uh, anyway, because the, the data [00:07:03] coming in through the best temp automation just wasn’t cutting it.
Andrew Warner: I’m shocked by how many bookkeeping companies I’ve used over the years that have done that. They’ve asked me to give them access [00:07:12] to the CSV. They have gotten CSV files themselves. It’s so frustrating that that’s what they’re doing. Okay. And so you notice that and you said, okay, I definitely could build [00:07:21] software that would do it.
I get now that you understood what can be done, why did you decide that you were essentially gonna build a QuickBooks or zero replacement [00:07:30] instead of saying this exists? People have tried to unseat them for years. And I’m just going to build on top of them.
Helen Hastings: Yeah, the, the [00:07:39] biggest limitation to everything I just told you about was actually QuickBooks.
So for example, the, the plaid connectors that everyone uses had all the problems that I just [00:07:48] talked about. Uh, the ability to automate things in there is just so limited. And, uh, a lot of that is because it’s, it’s trying to do everything for everyone. I [00:07:57] mean, the market penetration of QuickBooks in, in the US is, is just, uh, crazy end.
Because it works for all small businesses. That means it’s not [00:08:06] specialized in, in any, and because, uh, it’s limitations. There’s so much manual work that is needed. So it was actually essential to me to say we’re, we’re just [00:08:15] gonna build this for the ground up or else we’re never gonna be able to. Deliver on, uh, on our thesis.
And then also really the, the reason I started this company is, is I’m a [00:08:24] software engineer who has built a lot of ledgers. That was what I did for my entire career in FinTech. Building financial systems of record is the, the word that we used. That was my [00:08:33] specialty, and that was what I saw as the opportunity.
If, if we can build the financial system of record for businesses from the ground up, we can solve all of this pain [00:08:42] that I’ve been seeing that, uh, has been caused by just the limitations of that existing general ledger software.
Andrew Warner: Would you gimme an example? Like what couldn’t you do with [00:08:51] QuickBooks that beyond obviously the plaid connection that we just talked about.
Helen Hastings: So one classic example is anytime someone changes [00:09:00] something, all of the properties of the system are, are messed up. I could go in there and create something in QuickBooks that just changes the bank balance of my [00:09:09] bank. Uh, and, and that’s one reason the pla connectors only go so far is if someone just makes some little edit thinking that they’re doing something else.
Suddenly my bank balance is [00:09:18] wrong and my source of truth is wrong. So we’ve built something that, uh, enforces that. Edits are only made correctly because we’re reconciling [00:09:27] continuously all the time. And something that can track changes, changes of all different types, to know what is the history of, of what happened.
So [00:09:36] every change, um, comes with the understanding of what happened here and only good changes sort of make it through that reconciliation process.
Andrew Warner: So that’s [00:09:45] why every time I go through my monthly check-in with the bookkeepers, they always will say, I, I’ll see something and I want to go and change it.
They’ll say, no, no, let me do it because I might [00:09:54] in fixing it, screw everything up.
Helen Hastings: Exactly. Yes. And, and the way QuickBooks is set up is it just makes it really easy for you to make those [00:10:03] mistakes because it doesn’t have all these checks built in. It’s really just, um, sort of a, a blank slate you can write into.
And the only way to verify [00:10:12] that the data’s correct is, is people manually looking at it. Versus the thing that we’ve built from the ground up is checking itself all the time. Redundancy is a big [00:10:21] thing that, that we talk about at Quanta. You need to have a bunch of redundant checks, and they’re running all the time to make sure that the data is accurate.
Andrew Warner: For example, like what’s a redundant [00:10:30] check that catches, I guess it’s the bal, the balance in a bank account, right? The
Helen Hastings: balance in the bank account is one. And then how are all the transactions in the bank [00:10:39] account matching what we see in our system? So that’s two pieces of data that if one is right, this one is right, this one’s gonna be right.
However, we should do both of them just [00:10:48] to make sure. And then also, are all those bank transactions matching some other system? Big transactions usually in a vacuum aren’t the only piece of data. They’re usually [00:10:57] linked to something else. So, for example, um, from my payroll system, I see that a payroll ran, and then in my bank I see that the money moved to run that [00:11:06] payroll.
We match those things together and make sure that they’re consistent. And QuickBooks does not do that, but we built that from the ground up in our system. [00:11:15]
Andrew Warner: All right. Let’s go back even a little bit, uh, before all this, how did you know that this needed to be built? Where did you get the idea?
Helen Hastings: So [00:11:24] in my past job before starting Quanta, I was a software engineer at Affirm the, the FinTech and, and lender.
Uh, I was there for almost six years, joined [00:11:33] when it was, uh, around a hundred people. Got to grow it through over 2000 people, uh, through IPO. And really all I did was build [00:11:42] ledgers there. And I, I was building ledgers before I even really knew anything about accounting, but just the way we built things there was.
Double [00:11:51] entry ledgers. Uh, and it just made sense. If you’re running financial systems, if you’re keeping track of balances and where money is and where it’s owed and, and where it’s moved and where it’s [00:12:00] moving you, you build in this way, this immutable way of tracking every single change. And I saw that when you built in this way, you solved a lot of pain and just [00:12:09] understanding the, the system.
And then I, I worked on the first iteration of a firm’s in-house, uh, accounting ledger. Um, and it was pieing [00:12:18] into to NetSuite, which is another, um, just the, uh, the dominant ERP right now. Uh, but the, the source of truth for all of the, the core of [00:12:27] foreign data was going through the in-house ledger that we built.
And I saw the limitations of existing systems, and I saw just the lack of clarity [00:12:36] that existed before. Uh. Our team worked on this, and I thought for a bit, maybe this is just a, an affirm problem. Maybe this is just a [00:12:45] complex FinTech problem. But then when I was doing user research after I left Affirm, I thought.
Actually, all companies have this problem. They don’t have [00:12:54] visibility into sometimes just basic questions. How much money am I making? How much do my customers owe me? How much do I owe to others? And the root of it is [00:13:03] the, uh, the limitations with the, the underlying tracking of, of the finances. And I, I wanted to solve that problem [00:13:12] because I saw if, if we do this.
There will just be so much pain solved in just understanding what is going on in your business. At the core of it is, is very [00:13:21] basic. There’s really just no visibility right now. If you are waiting until, uh, the end of the month to understand what your finances are, the time is already [00:13:30] passed to make the decisions that are important, you really need to be making decisions on a day-to-day basis, and that requires understanding the fundamental numbers [00:13:39] of your business.
Andrew Warner: Yeah. Those are the two things that have really made it easy for me to understand why people are working with you. The first is. With most bookkeepers, it [00:13:48] takes at least until halfway through the next month before they’re done with the month, and sometimes it takes you a little scheduling time and so you’re basically [00:13:57] about a month out from what happened And, and I.
I always wondered why they couldn’t get it done faster, especially since I’d interviewed so many people whose whole [00:14:06] thesis was software can do a better job than bookkeepers. So that’s the first thing. And the second thing is when you’re trying to answer a question, it is so hard to get that answer from software that [00:14:15] you have to go to a human being who did the books and find out like little things like how much are we spending in software?
Well, we got software in all these different buckets. Let me go and add that [00:14:24] up. Um, and that seems like the two big, the two big exciting parts about this.
Helen Hastings: Definitely, I mean, it’s even more than a month often. Uh, so it’s, [00:14:33] but just, uh, we’re recording in in early December right now. I mean, I talk to companies that do not have their October data yet [00:14:42] because their outsource firm starts on their October data towards the end of November because they have just a long queue of clients.
The thing is, once you’re doing [00:14:51] something manual with humans. You’re not doing it every day because that you just don’t have enough humans to do that. So suddenly there’s a long list of work. So as [00:15:00] soon as something is manual, you are doing it on a very long time delay. So if you happen to be at the bottom of the queue, and sometimes the, uh, outsource booking being [00:15:09] FERBs charge you more to be at the top of the queue.
So if you’re at the bottom of the queue, they might not start on your data until the end of the next month and then take a while to, to finish [00:15:18] it. So it, it even sometimes is longer than, than just a month. Mm-hmm. And by the time you get that information, it’s, it’s just not, it’s just not useful. Uh, at all, [00:15:27] and, and we’ve really changed how companies see their financial data because if it’s two months late, it, it’s just useless at the speed that startups are are going.
You, [00:15:36] you can’t be operating at, at that pace. But once you have it available to you and close to real time, you’re actually looking at it and using it to make. Decisions. So [00:15:45] it’s interesting how some, with some of our customers, they used to see the bookkeeping as just, it adds something I have to do. It’s around tax season, but now we’ve changed it into something that’s [00:15:54] strategic because you have data that you need to make decisions that are critical to your business.
Andrew Warner: Okay, so first thing, you’re discovering a problem, a pain, and you say, okay, I think [00:16:03] software can do this, especially the way that it is today. The second thing is you’re going and you’re evaluating, you’re shadowing people who are doing it already to see, okay, what are they doing that they may not [00:16:12] be noticing?
That I think is an opportunity for us. Before you do it yourself, do you validate, you go to small businesses, do you go to startups and say, if I bill this, would you be willing to pay? [00:16:21] Or do you just say, I see enough of a problem, I’m ready to go.
Helen Hastings: Oh, absolutely. I, I recommend to any founder ask people if they’re willing to pay [00:16:30] for, for something.
I think it’s essential to starting a business. I mean, you definitely need to trust your, your guts, uh, as well. But understanding how [00:16:39] customers think about things is so important for a go to market. So there’s one thing to say, I know this product is gonna solve pain, and it’s another to understand how do people perceive it [00:16:48] and how do you talk about it such that, uh, they are, are going to purchase it.
Okay.
Andrew Warner: How much did you get? Like how much financial interest did they, were they willing [00:16:57] to pay? Was there a story of somebody who said, let me wire you now?
Helen Hastings: Um, yeah. I mean we, when I was talking to people, they said, yeah, I, I would, [00:17:06] I would do this. I would totally switch over, uh, from my existing. That’s it.
To just, just having them say
Andrew Warner: I would is enough.
Helen Hastings: Yes, yes.
Andrew Warner: That’s a hard [00:17:15] one because, because you’re taking on their full books. People would say sure, if you can build it, but you know, there’s always gonna be some edge case, some little thing that they need that they have in QuickBooks, like [00:17:24] access to, uh, the ability to give their accountants access, the ability to give their bookkeeper all that stuff.
Helen Hastings: Well, that’s, uh, one reason that [00:17:33] the, the hybrid software and and services model, um, is a, a great way to get started, uh, on a business like ours because that last [00:17:42] mile edge case, we, we do have humans do, and it’s helpful for onboarding and understanding the, our customer’s businesses and. They [00:17:51] also like, they want that peace of mind of, of, there’s a human, um, as well.
So we’re able to automate the, the vast majority of it, but they have someone to, to [00:18:00] talk to who has a CPA background and, and works at Quanta. I see. And knowing that we can bridge that last mile edge case with that human in the loop process, which by the [00:18:09] way is such a standard way to, to build software in the, the AI era, especially in this, um, tech enabled services industry.
It just gives us the [00:18:18] confidence that like, let’s just get off the ground running, working with customers as soon as possible because we know that we can bridge that last mile and then over time it gets more and more and more [00:18:27] automated.
Andrew Warner: I see. And if you could just give them, I guess, Excel spreadsheets with their data that that’s enough.
Is that what it was?
Helen Hastings: Um, we, [00:18:36] uh, I don’t think there’s been a time where we’ve just handed over an Excel spreadsheet of, of data, the, the last mile things that we were doing, mainly from, uh, the [00:18:45] beginning. Were just like looking at the data ourselves before our engine could process it and, and handle it. Or maybe a, a new [00:18:54] financial tool that we hadn’t built in integration yet, or we didn’t understand, or maybe you were using the, the latest, um, type of payroll [00:19:03] system and a new payroll provider and we hadn’t built the understanding of it and automated it yet.
That was the thing that we would bridge manually in the meantime. And, and have engineers do that too [00:19:12] and have me do that. And I think that, by the way, I think that’s the best way to just build a great product is really see the. The dirty parts of it instead of just handing it off [00:19:21] to, to someone else. But we, uh, in terms of just doing it in spreadsheets, that that’s not something that we wanted to do.
It’s been important to us from the beginning to [00:19:30] have it all within the QU platform. Okay. But sometimes we would manually get the data in there to start. I see. Uh, but once it’s in there, it’s in this well [00:19:39] understood system that we’ve built that unlocks understanding for our customers.
Andrew Warner: You know, when I. I interviewed the founder of Zenni.
That’s an odd [00:19:48] AI bookkeeping company. This was back in April, 2021. And I thought it’s so compelling, but at the same time, I had a hesitation. I said, I don’t know that I want to trust your [00:19:57] software. And what the founder said to me was, you know what? Worst case, you still have everything in QuickBooks so you can always switch us out.
And I said, okay, that’s a reassuring thing. That’s what I meant with [00:20:06] you. Was there any kind of backstop there in case people didn’t like what you were doing?
Helen Hastings: Sure. So by the way, we get this, uh, the [00:20:15] trust problem all the time. It’s, it’s so enormous in accounting and, and we still get it every single day. We actually recently, uh, announced our Series A and announced a new [00:20:24] product, which is agentic reporting, so it can really answer any question about your business.
And I got so many messages that day of this is [00:20:33] fantastic, does it work? And if this works, I will buy it. But they don’t. Trust that it works yet. Yeah. It’s almost too good to be, to be true. So it’s a, [00:20:42] it’s, this is a big problem in, in the AI era, I think, is these two good to be true problems, but when it comes to the, the, uh, QuickBooks and bookkeeping, um, you know, [00:20:51] actually we do have a product that we call a QuickBooks backup where.
If, if you, for whatever reason want to do an export into QuickBooks [00:21:00] or even keep a QuickBooks up to date, we, we support that. Ah, yeah. And it’s a good way to get people in the door. Especially we, we work with a lot of companies who have [00:21:09] had years of previous bookkeeping history and then they come to, to Quanta and they’re kind of afraid to give up.
They’re QuickBooks and I think they, they should be. [00:21:18] Mm-hmm. You think of the companies like Bench going out of business and people have no access to their history of the most critical business data. Um, so I, I, I [00:21:27] definitely understand that there’s that hesitancy. So one, a strategy that’s worked well for us is saying, you know, we’ll keep your QuickBooks up to date for you.
Quanta becomes the source of truth. [00:21:36] You can’t touch the QuickBooks anymore because that would mess with all of the. The properties of our system that I was discussing earlier, but we’ll, we’ll let you keep that up to [00:21:45] date. Keep that live with quantum data as if someone was keeping it pristine from the beginning.
Uh, but then we find that our customers will often just shut it [00:21:54] down after they realize, okay, I don’t need this anymore. Why should I pay for this system on the.
Andrew Warner: So funny, like you mentioned Bench. They, I’m pretty sure were a [00:22:03] sponsor of mine, um, because bookkeeping is so popular. So they sponsored then, um, all these companies I’d worked with in one way or the other pilot, I think was a [00:22:12] sponsor and I really loved what they were doing By, um, adding automations into QuickBooks, I invested in Ind Narrow.
I think it was the first startup I ever invested in. [00:22:21] They were gonna replace QuickBooks, which at the time, and still today, I can’t stand. I hate QuickBooks. But then there were all these issues with it. They eventually all seemed to come back [00:22:30] into QuickBooks. And the one company that survived is I, I interviewed the founder of zero years ago.
And for some reason they’re still around. I don’t know what [00:22:39] the difference is. Why, why are they around? And then I’ll ask you about getting into this space where everyone’s dying. Why do you think Zero has survived?
Helen Hastings: So [00:22:48] Xero actually has a great market penetration outside of the us So they were founded in New Zealand actually, and their international [00:22:57] support is, is, uh, really incredible.
So they, they’re very popular in other countries. QuickBooks is the dominant, uh, player by far in the us but Xero [00:23:06] has a great international footing. So I’ll talk to some US companies that use Xero just because they started in another country or the person managing the books was, um, from another [00:23:15] country.
Andrew Warner: And so what do they do differently? They work for other countries.
Helen Hastings: Um, really, I think so much of it is about just knowledge, right? [00:23:24] Mind share. People know about it because it is just, uh, a dominant in that space. And, uh. Every country has a little bit of [00:23:33] difference in how do you set up what, uh, what categories the tax authority in that, uh, country really cares about.
[00:23:42] Because a lot of the early stage bookkeeping is, it’s an input into tax and be, if your tax authority is different as it is across different countries, then maybe you wanna structure [00:23:51] things differently.
Andrew Warner: Okay. Yeah. They also, I think were cloud Before QuickBooks was fully cloud, they also did the thing, QuickBooks [00:24:00] is
Helen Hastings: still not even fully cloud, which is you.
Very funny. What do you mean? I think so. A lot of people still use QuickBooks Desktop. They will go, it’s still available. Buy Uh, yes. I [00:24:09] think they might’ve started deprecating it very recently and it was a huge deal. A lot of people were up in arms. About, oh, no. [00:24:18] QuickBooks is saying that they’re gonna start, uh, not investing more in QuickBooks Desktop because people do assert that QuickBooks Desktop can do more than, uh, uh, [00:24:27] QuickBooks.
Um, online. It’s funny. The acronym that everyone refers to for QuickBooks is QBO.
Andrew Warner: Yes,
Helen Hastings: the O stands for online. Yes. And that [00:24:36] just shows how dated of a product this is, is that the word that it’s online is such an important Right. Characteristic of the company.
Andrew Warner: Right. But
Helen Hastings: [00:24:45] the, I, I talk to so many, um, uh, accountants, the bookkeepers who just love QuickBooks Desktop and assert that it is better than QBO, QuickBooks [00:24:54] online.
And, um, again, I think it just, it, it shows how, how data this industry is. I’m
Andrew Warner: gonna be one of those people. I actually think if you’re doing it individually and you’re [00:25:03] not trying to collaborate with other people, their desktop has less of the garbage that all of their online stuff has. And I understand why people would want to get rid of all that garbage.
Every time you [00:25:12] log in. There’s more cruft more than trying to analyze how you’re doing. Do a Quantas, uh, is that what it is? No lytics or whatever it is that they’re using to figure out if I’m happy with them or [00:25:21] not. And I keep telling ’em I’m not happy with them and they haven’t changed anything. So why do you keep popping up that rectangle on the bottom of the screen?
Um, alright, I get it. But aren’t you scared [00:25:30] now considering how bad they are? They’ve been so bad for so long and still. Pilot, um, Zenni [00:25:39] zero to some degree. You even posted on, on your LinkedIn a little while back about they, they’re the second in the business and they have tiny market share. All these different [00:25:48] in narrow, all these companies failed.
Why do you feel like you’re ready to succeed in this space where they’re all gone?
Helen Hastings: Um. And this is your question [00:25:57] earlier also of, uh, if there’s so many, there’s a graveyard near, there’s a graveyard of companies that have tried. Uh, why, why are you so crazy? And, [00:26:06] uh, you know, I, the reason so many companies have tried is because it’s a massive problem.
And a massive pain. [00:26:15] And the, the tam, the, the total market is just enormous. Every single company meets this. And that’s also why [00:26:24] it’s, it’s so exciting, right? If it’s such a massive problem and we can change how all businesses work, then that is worth pursuing. And [00:26:33] I and Quanta have taken a very different approach than the companies that, that we’ve just talked about.
It was by no means easy. Our approach was we only work [00:26:42] with companies that fit within the automation that we have built. So pilots, any, the ones we just talked about, they have hired a very large staff [00:26:51] that is just using QuickBooks. So they did not start by building their own QuickBooks replacement. They started using QuickBooks and they started by [00:27:00] hiring a lot of people and they have gone very horizontal in the types of companies that they support.
So we’re talking anything from [00:27:09] aquariums to, uh, coffee shops. I see. Physical machinery and that is just very [00:27:18] difficult to do, uh, if you haven’t truly automated it first. So once you hire the people to do it, and once you’re supporting that, it’s very hard to go the the other way and [00:27:27] come back to the automation.
Quato. We only work with companies that have a business model instead of tools that fit within what our software does. And that was very hard from the [00:27:36] beginning because I had to say no to so many customers that wanted to use us. And, and we still do. Even just earlier this morning, every single day we get someone, you know, [00:27:45] nonprofit that I would love to help, and they say they hate QuickBooks.
And, uh, Bobi just, we can’t support their, their business model. Right now, uh, that, that, that discipline [00:27:54] has made sure that we actually, uh, have a viable business and we are operating at a quality level that you can’t find elsewhere. [00:28:03] But once you resort to, I’m just gonna throw humans, um, at the problem and have them use QuickBooks, then you get stuck in this trap.
Andrew Warner: Um, and you know what? I shouldn’t say [00:28:12] that these all have failed indro. I think they ended their software, but I’ve been seeing their financials. You advocate that founders need to email their [00:28:21] investors once a month with updates. I think they’ve been doing this now for well over a decade, consistently. Um, and so I see that they’re doing well, but they’re not in the, in the, we are gonna [00:28:30] knock QuickBooks off business.
They’re in the, we will work. To do your books business. We’ve got people here. Um, and I guess every one of these [00:28:39] companies has found their own little niche. They just didn’t unsee QuickBooks. And I don’t, I don’t understand why. And I guess what you’re saying is just like Xero started with New [00:28:48] Zealand.
Your New Zealand is these companies that can be fully automated. We’re gonna work with them and then we’re gonna expand Zero, expanded to Australia, then the uk, [00:28:57] then the rest of the world we’re doing that.
Helen Hastings: Uh, exactly. And um, QuickBooks it. It can solve for [00:29:06] any sort of business model because it’s so generic.
But because of that, it’s sort of just, it’s like I said, a blank slate, just a little database. You can write anything into there. And because of [00:29:15] that, it can support any business, but also because of that, it doesn’t do any one business in incredibly well. And I believe the best way to start a company is to start with [00:29:24] one uh, area where you can really make a difference and really.
Solve their pain and even just change how they’re, they’re doing things. But if you’re a [00:29:33] bookkeeper that needs to be able to support any business in your neighborhood, you need the software that’s gonna work for all of those sorts of [00:29:42] businesses, and QuickBooks can do that for you.
Andrew Warner: So I’m on your site, it’s use qu.com.
I don’t see that, that focus. It says, full service [00:29:51] accounting, supported by intelligent platform that delivers the metrics that matter. Where is it that you’re screening out the people who aren’t a good fit, or you’re saying who it is a good fit for? I’m trying to [00:30:00] understand what that focus is.
Helen Hastings: Uh, well, maybe, uh, it’s a great point that we need to, to qualify that at the beginning.
Um, be [00:30:09] because we do get a lot of demo requests and, and a lot of outreach from customers that we can’t support. But all of our, uh, our outreach in terms [00:30:18] of who are we reaching out to, who are we marketing to? That’s all within the, um, early stage to growth stage software companies is, is what we focus on.
I see. I see. So the fact that it’s early
Andrew Warner: [00:30:27] stage and growth stage means, and software means that if they’re software, they’re all probably using Stripe or Paddle or a couple of other tools. They’re not using, they’re not [00:30:36] using one of these credit card machines that work in a store. Because they’re software, it means that they all have the same type of tools that are easy to automate.
That’s the, that’s a [00:30:45] distinction.
Helen Hastings: Yeah, if you look at our integrations page, you’ll see the stack that is the, the modern financial stack for, for companies, uh, for, for software companies. [00:30:54] Although we’ve, uh, we work with services businesses as well and, and some agencies. Uh, the key thing we can’t support right now is a lot of physical inventory.
That’s just a, a different type of [00:31:03] accounting that we’ll get there, uh, eventually, but we’re very intentional of we’re gonna do it right if we’re gonna support your business model. And actually services and agencies is. Similar to [00:31:12] software as a service when it comes to accounting. So it’s not just SaaS companies we support, but not having physical inventory is the the key thing we focus on [00:31:21] right now.
Andrew Warner: Okay. Yeah, and I do see all these software tools that we use. It’s like Mercury Ramp right at the top, rippling Gusto, stripe, um, [00:31:30] Carta. I’m surprised that that even matters to you, but, um. Uh, actually why, but equity
Helen Hastings: accounting is actually a, a very big pain to, to do it correctly. There’s [00:31:39] actually a lot of, uh, accounting nuance and, uh, why do you need to do equity accounting?
Andrew Warner: To keep my books.
Helen Hastings: Um, so we’re, uh, our [00:31:48] focus is yes, we serve day one companies just incorporated yesterday. And you can do that, like, you can do that bookkeeping in, in the minimal [00:31:57] way. However, we support a lot of companies who are re really care about their numbers and, and they’re growing up and they’re, they’re looking towards getting audited.
And the accounting for that, for an equity [00:32:06] perspective is actually not as simple as. Let me take this wire from my investor and put it into equity. There’s actually a lot more [00:32:15] that you have to understand to do it correctly.
Andrew Warner: Okay. Alright, so let’s go back. Actually one other thing before we go back. I wonder if also just like people [00:32:24] were willing to reconsider their software when things went from desktop to the web, and again, when things went from computer to [00:32:33] mobile.
The fact that we’re now making a new leap into AI means the companies are saying, wait. I’m living in an AI world. My software is living in and pre AI world. I’m [00:32:42] open to, in fact, I’m excited to explore what AI means for bookkeeping. I’m excited to explore what AI means for search and what AI means for, uh, writing.
Is that, [00:32:51] is that part of it too for you?
Helen Hastings: A Absolutely. So when I was doing user research in 2022 and I talked to controllers, which of the head of accounting and [00:33:00] accounting managers, they said, NetSuite’s the only option. We starved QuickBooks. And you switch to NetSuite. Yes. And I would never choose anything different.
Yes, I’ve seen that. But now people’s [00:33:09] minds are, are open and they’re looking at a lot of different tools. And, uh, AI has been, uh, a big catalyst for that. They’re saying, okay, the technology is, is [00:33:18] changing. We could be, uh, taking advantage of, of better things. So I’m gonna keep an open mind and I’m gonna look and there’s a little bit of negativity there also, and [00:33:27] fomo, and I don’t wanna be left behind.
I need to be taking advantage of the new, of the new technology. So that, that is a really big, uh, really big part of [00:33:36] it. And then I would say the other thing that the AI era has brought on that Quanta helps a lot with is. You just need to keep up with your margins [00:33:45] as a software company in a way that has never been important in the past 15 years.
The past 15 years of SaaS businesses, everyone just assumes that their margins are [00:33:54] incredible. Uh, but now companies are spending so much. On the L-L-M-A-P-I providers, and because traditional bookkeepers don’t [00:34:03] understand those new vendors and how to treat them, they often get lost in operating expenses and their expenses, and they’re not being tracked as your, your cost of revenue.
[00:34:12] So we work with companies to make sure that they’re tracking their, their margins, and these things are changing on a day-to-day basis, by the way, because of usage-based pricing, which is [00:34:21] very new and dominant for the AI era. You need to be keeping up with your margins on a day-to-day basis or else you’re behind.
So, and you’re doing that real time. Yeah. [00:34:30] So, yeah, so Real Time is a, a core component of, of Quanta, all of that real time reconciliation I was telling you about. We let companies be able to go in and see what’s [00:34:39] going on on a day-to-day basis, which is something that was not possible before and is. Really, uh, becoming a requirement in the AI era because your [00:34:48] costs are so volatile and changing every day, and the margin profiles of software businesses have completely changed with how expensive, uh, [00:34:57] their costs are and how those costs scale when their users use them more, which used to be something that was not big in SaaS with fixed monthly pricing.[00:35:06]
Andrew Warner: Okay, so it comes from, if I were to deconstruct how Quanta got where it is, comes from you discovering a real problem, [00:35:15] but going the next step and saying, let me see if I fully understand it, by shadowing companies that would experience this problem and saying, okay, [00:35:24] as a developer, I know I can solve this Then.
You and your team doing a lot of it manually as you’re creating the software that does it. [00:35:33] But actually I skipped a step. One is saying, we will not do a lot of this stuff until we own the data That actually having clean organized data [00:35:42] is as important or it’s critical to getting the next step, which is using AI and human intelligence to analyze it and make it useful.
That’s it That. [00:35:51]
Helen Hastings: That’s exactly right. I would say for anyone looking to, uh, use AI to start a company, to displace what was traditionally done very manually by humans first, see what [00:36:00] they’re doing. Uh, really understand it. Then two, do do it yourself as you bring on your first customers. So do the work [00:36:09] yourself.
Don’t outsource it. Make sure you understand the ins and outs of it. And then three, make sure you are, uh, in your data storage. [00:36:18] Really understanding and, and building up a clean, uh, structured data. Because when you apply AI on top of that, it, it can be like magic. But if you’re [00:36:27] taking chat TBT and putting on messy data, you’re, you can only get garbage out if you put garbage in.
So make sure the data that you’re storing is, is clean and understood. [00:36:36] Um, and then after that you’ll be able to, to automate something that was manual before.
Andrew Warner: All right. How much money do you raise? Tell us. [00:36:45]
Helen Hastings: Uh, and the recent series A, we raised $15 million, uh, led by Excel and, uh, we also had a, a seed round [00:36:54] previously.
So it’s been, uh, 20 million in total so far.
Andrew Warner: Um, and then how many customers do you have now?
Helen Hastings: Um, [00:37:03] we have, uh, just under a hundred right now.
Andrew Warner: Wow. All right. Solid business. What’s next? Where are you going with what’s next? Now? Where are you going with the business? [00:37:12]
Helen Hastings: So the thing we’re very excited about right now that we just announced with our Series A is a product called Prism.
Uh, so what I just said about [00:37:21] applying AI on top of, uh, clean and, and structured data, uh, is that if you understand all of the finances of your customers, you [00:37:30] can really answer any question, uh, about it. So that’s what Prism does is you can ask a natural language question, really anything about your business, and we’ll give you an answer.
[00:37:39] But what the really exciting thing is, is that answer explains itself. Itself. Yes, it can prove its logic and show evidence all the way back to the, [00:37:48] the source data. So links back into your financial tools and showing all of the logic and helping, um, understand that it, it’s complete, it [00:37:57] is covering all of its spaces.
And this is work that would previously take finance owners. Many hours a week to do. It’s always a new spreadsheet every day, [00:38:06] going back to all your financial tools and digging up data. But because of the way that that Quanta stores everything, we can actually automate answering that way. Like what, by the way, by doubling down on that
Andrew Warner: [00:38:15] mm-hmm.
I kept saying yes because you’re right to just get an answer. I don’t trust it. What I want is an answer and then cite your source so that I can go back and understand that you did [00:38:24] get it right and that actually answers the question that people had asked you. How do I know if all this is right? Um, okay.
Gimme before you go to the. Before you go to the next thing, I’m [00:38:33] curious about an example. Do you have an example of something that people could ask now that they couldn’t ask before or that they only could ask human beings before?
Helen Hastings: Yeah, de [00:38:42] definitely. So the one thing I saw in how other bookkeepers were, uh, doing books for companies that eventually became my customers [00:38:51] is that Stripe is the big case example, where they would go into Stripe, they’d download a report, they’d sum up all the numbers, uh, and then just take [00:39:00] one number out, which is this much revenue last month.
What you’ve lost in that process is you’ve lost, well, how many customers churned, how many upgraded, [00:39:09] what products are they using? Uh, all of this really important information you need to understand your business. Quanta, retains all of that, and even if it’s [00:39:18] not every detailed, uh, entry in your eventual general ledger, we store up a lot of other operational data that we then can use for tools like [00:39:27] Prism.
So you can ask. What products were being used, who has churned, who has upgraded, uh, who has been refunded? Really just what happened with my [00:39:36] customers recently. And we can instantly spread out a report that, that talks about that versus, uh, in. With any other provider, [00:39:45] you’d have to go back and log in and grab all that data and then log into your bank to see who paid you back over the bank and not stripe, and then log into your contract system.[00:39:54]
And that just takes hours and hours of digging.
Andrew Warner: All right. You know, I actually wanna close with this one thing. I’m going to interview one of your investors, IAD Gill. How well do you know [00:40:03] him?
Helen Hastings: Uh, I actually saw him last night at their holiday party, um, and his chief of staff, uh, was in my office just [00:40:12] yesterday.
It’s, it’s very funny that you bring that up, but he, uh, I mean, obviously he invests in, in so many companies, but, uh, hi. His team [00:40:21] is, is incredibly supportive and, uh, they’re a pleasure to work with.
Andrew Warner: What makes him so, so interesting. Yeah, he’s in, he invested in Stripe and Airbnb, [00:40:30] Coinbase, uh, notion, a lot of AI companies, Airtable, I can keep going through it.
What makes him so, so good to work with or his team? [00:40:39]
Helen Hastings: Um, so his team, uh, like I said, is the chief of staff was in our office yesterday and is directly helpful in terms of [00:40:48] customer connections, recruiting, uh, of course advice, but really that that boots on the ground, let’s do an event together. Let’s, I’m gonna connect you [00:40:57] to potential customers.
Uh, and that is just a incredible value as a founder.
Andrew Warner: Alright, thank you so much, Helen.
Helen Hastings: Yeah. [00:41:06] Well thank you. Uh, I appreciate you having me on and this was a lot of fun.
Andrew Warner: Hell yeah. Congratulations.
