Expensify's $100M Revenue: The 'Stem Cell' Hiring Strategy

The Profound Impact of Founders on Company Culture

The degree to which a company’s culture is shaped by its founder is immense. A founder’s perspectives on the product, the business model, and their approach to personnel all significantly influence employee conduct. Given that employee behavior directly contributes to the overall culture, the initial choices made by a founder can have lasting effects.

Therefore, it’s understandable that Expensify operates with a distinctive approach to nearly every aspect of its business. This stems from a core belief instilled in founder and CEO David Barrett early in his career: “The vast majority of people are incorrect in their assumptions about most things.”

As previously discussed, this realization led Barrett to conclude that independent problem-solving is often more effective than seeking external advice. These insights, coupled with a collaborative, peer-to-peer hacking mindset fostered with colleagues and Travis Kalanick at Red Swoosh, ultimately guided his development of Expensify.

Maintaining a Unique Identity

It’s remarkable that Expensify has preserved this distinctive character for over a decade, even as it prepares for an initial public offering. What accounts for this consistency? Through interviews conducted in February and early March, we discovered that the company’s commitment to its culture is central to its success.

The team at Expensify actively embraces innovation, creating its own strategies and adapting them as needed. Their human resources policies and overall strategy are specifically designed to attract individuals who would genuinely enjoy contributing to the development of an expense management solution.

Furthermore, Expensify employs a unique system for employee growth and recognition, designed to mitigate potential challenges associated with a relatively flat organizational structure. Notably, the company even features a “Senate” responsible for reviewing all significant decisions.

Achieving Scale with a Lean Team

These efforts, among others, have enabled Expensify to serve over 10 million users and generate $100 million in annual revenue with a team of only 130 employees. Let’s delve deeper into the specific strategies that drive Expensify’s achievements.

Key Takeaway: A founder’s early philosophies and experiences are instrumental in establishing a company’s culture, and a deliberate focus on nurturing that culture can lead to significant success.

A Lean Team Philosophy at Expensify

Expensify deliberately maintains a high revenue-per-employee ratio, reflecting a core principle articulated by its founder: “We want the fewest people necessary to get the job done,” as stated by Barrett. The question then becomes, how is this operational efficiency actually realized?

Specifically, how does the company attract and retain individuals capable of consistently delivering exceptional outcomes? Barrett emphasizes that building such a team required significant learning through experience.

Early Challenges in Talent Acquisition

Expensify’s initial team, located in San Francisco, consisted of former colleagues from Red Swoosh and Akamai, joining shortly after Barrett’s departure from Akamai. While sufficient for initial operations, expanding the team proved difficult.

Barrett points out that Silicon Valley, despite its concentration of skilled professionals, isn't necessarily the optimal location for recruitment. He explains, “Sure, Silicon Valley has a ton of really awesome people, but all of them have jobs!”

Retention Difficulties in the Startup Phase

Maintaining team stability also presented a hurdle, a common issue for early-stage ventures. Barrett recalls, “The early days were tough because there was so much uncertainty.”

He continues, “Keeping a team together that has basically nothing – no customers, no money, no experience, no reputation – was very challenging during that period.”

Growth and its Impact on Team Dynamics

As the business gained traction, both hiring and employee retention improved considerably. Barrett succinctly summarizes this shift: “Nothing settles nerves like results.”

By 2012, just four years after its launch, Expensify had surpassed one million users with a team of only 17. Two years later, the headcount increased to 45 to further support its already profitable operations.

This growth allowed Expensify to establish a strong foundation built upon “a group of core people that really stuck around and all adopted the same best practices.” A prime example is Jason Mills, the director of product and customers, who joined Expensify in May 2011 and remains a long-tenured employee.

Key Principle: Prioritizing efficiency with a minimal team size.
Challenge: Initial difficulties in attracting and retaining talent.
Solution: Demonstrable results leading to improved hiring and retention.

Maximizing Output with Minimal Resources

The company’s achievements to date have been noteworthy, yet it’s crucial to recognize the emphasis placed on sustaining operational efficiency. Achieving profitability with a workforce of approximately 50 individuals represents a significant accomplishment, and it’s evident that personnel selection played a key role in this outcome.

Expensify employs a deliberate approach to recruitment, and, consistent with its overall philosophy, it presents a uniquely innovative method. The hiring process at Expensify doesn’t begin with a review of resumes, as the organization doesn’t prioritize prior work history. Barrett conveyed to TechCrunch, “Our focus is on the individuals themselves, rather than their past accomplishments.”

Instead of a conventional CV guiding the application procedure, Expensify requests information regarding candidates’ coding and administrative backgrounds, whether they maintain a personal website (and, if not, the reasoning behind that decision), and how aligning with Expensify contributes to their long-term aspirations. Beyond assessing motivation, the process aims to identify three core attributes: “Innate talent, ambition, and humility.” While this approach may blur the lines between personal and professional spheres, it is intentional, as Barrett posits that “individuals won’t be driven to succeed for Expensify unless they’ve first established personal objectives.”

This de-emphasis on previous experience has yielded two notable consequences. Firstly, it has fostered a team largely devoid of individuals with prior experience in the fintech or accounting industries, a surprising characteristic for an expense management firm. Secondly, Expensify has consistently favored emerging talent. “We seek individuals with such rapid career progression that our only viable option is to recruit them at an early stage,” Barrett explained in a 2010 blog post directed towards recruiters.

It’s important to note that Expensify’s recruitment strategy is decidedly opinionated and initially exhibited certain biases. For example, its preference for candidates applying for positions below their seniority level bordered on age discrimination. However, this was over a decade ago, and the company now operates a comprehensive diversity and inclusion program.

Certain criteria, such as a preference for candidates who began programming at a young age, could also potentially hinder diversity, as individuals from disadvantaged backgrounds may have limited access to early coding opportunities or personal website creation. Nevertheless, Joanie Wang, Director of Marketing and Brand, clarifies that these points are not strict requirements but rather serve as indicators of interesting qualities, and it’s common for applicants to simply state they do not have a website.

Wang is a co-leader of the diversity and inclusion (D&I) initiatives at Expensify, and emphasizes the company’s commitment to thoughtfully refining its hiring pipeline from a diversity perspective.

how expensify got to $100m in revenue by hiring ‘stem cells’ and not ‘cogs in a wheel’

Expensify is able to maintain high standards for prospective employees due to its historically conservative hiring practices, but this is sustainable because of the exceptional dedication of its team. “More than 60% of our employees have been with the company for over four years, which is remarkable in Silicon Valley. [ … ] We have numerous individuals who have been here for eight years,” Barrett stated.

The remarkably high retention rate at this company is likely attributable to an unusual factor. Expensify credits its low employee turnover to its practice of not recruiting C-level or top-tier executives from external sources. Barrett argues that external leadership hires “impose a limit on the growth potential of all employees, as it suggests that advancement within the company is unattainable due to a prioritization of skills that cannot be developed internally.”

Consequently, Expensify’s team composition differs significantly from what it would be at many other organizations, particularly within this industry, where seasoned accounting professionals and senior corporate managers are typically favored. “You’re familiar with the Fortune 500 executive brought in to improve things, only to make them worse? Fortunately, that type of individual doesn’t work here,” the company declared in its 2016 “advercruiting” campaign.

Some might cite COO Anu Muralidharan as an exception to this rule, but she progressed through the ranks like any other employee. Despite holding an MBA and having served as a Vice President at Citi, she is also an engineer, and, crucially, took “a significant risk” when she joined Expensify in late 2015. She shared that she accepted a position at the entry level, mirroring the experience of other employees, and subsequently rose to the position of COO after five years, one of the few formally designated roles within the company.

Muralidharan’s career path exemplifies how Expensify has fostered growth while investing in its workforce. “We believe that employees possess a virtually limitless capacity to generate value when provided with the appropriate conditions,” Barrett asserts.

Charting Individual Growth Trajectories

Expensify operates with a minimal hierarchy of formal titles – CEO, COO, and since 2020, CFO – as the company prepares for its IPO. Its organizational structure is notably flat, presenting both benefits and challenges, as noted by board member and CFO Ryan Schaffer.

This flat structure has fostered employee growth, as opportunities weren’t limited by a scarcity of traditional roles and titles. However, longer-tenured employees began to voice concerns about a perceived lack of career progression compared to their counterparts at other organizations, Schaffer recalls.

This prompted the development of a growth and recognition framework, built on the principle that individuals contribute in diverse ways and desire control over their career paths. The system is designed to be akin to a “choose your own adventure,” offering employees four distinct tracks – evangelist, generalist, people management, and tenure – which can be pursued independently and at varying paces.

Advancement within Expensify isn’t primarily measured by title changes or direct compensation increases. Instead, employees are motivated to progress within their chosen tracks for professional development. While some perks are unlocked, these are largely for recognition purposes. For example, speakers on the evangelist track may receive flight upgrades based on audience size, though this isn’t the primary incentive.

This framework clearly defines success at Expensify, revealing the company’s core values. The people management track, for instance, centers around two key principles: “Get things done” and “Don’t disrupt the process for others.” Progress on this track involves assisting colleagues with both of these objectives, according to Schaffer.

Mentorship is a significant component of this system, and has evolved from an initially informal practice to a more structured program. Expensify now ensures mentors are adequately prepared. “To qualify as a mentor, one must pass a challenging assessment,” Schaffer explains. “This test rigorously evaluates handling of difficult scenarios, available employee resources, and best practices for prioritization.”

The generalist track recognizes employees who contribute across multiple business areas and facilitate collaboration. The aim is to foster a culture where all employees are informed and capable of contributing to any aspect of the company, discouraging specialization. Expensify actively seeks “stem cells” rather than “cogs in a wheel,” and new hires are informed that versatility is valued.

Initially, this emphasis on generalism faced resistance from some existing employees, with a few choosing to leave the company. Even currently, employees acknowledge potential drawbacks, such as the cognitive load of maintaining broad knowledge and the extended onboarding time for new team members.

Despite these challenges, Schaffer believes a generalist team is invaluable. “A key factor in our high revenue per employee and overall efficiency is our commitment to identifying and eliminating bottlenecks,” he states. To achieve this, tasks and projects are divided into “chores” that anyone can undertake.

The tenure track is the most direct in its structure and highlights Expensify’s approach to internal governance. Completion of this track grants membership to the “top-tier group,” internally referred to as “the Senate of Expensify.” This means long-term employees, even without progress in other tracks, can participate in the company’s highest-level decision-making processes, such as the endorsement of Joe Biden in the 2020 U.S. elections.

Feedback from Expensify suggests the framework has positively impacted employee satisfaction and retention. Concerns about unclear career paths have diminished in internal surveys, and employees now report a clearer understanding of growth opportunities, particularly compared to other startups. Crucially, employees feel empowered to shape their own professional journeys.

The Expensify Approach: A Unique Workplace Philosophy

Expensify’s methods regarding recruitment, company culture, and work practices diverge from the conventional, stemming from a desire by Barrett and the initial team to forge an independent course. Given the company’s open communication style and Barrett’s reputation for challenging norms, some level of contention was inevitable.

A point of immediate criticism arose when Expensify discussed “the unexpectedly challenging task of securing suitable personnel.” Barrett’s emphasis on extended working hours drew particular scrutiny. While he later refined this to a “50-hour weekly workload,” the statement “If you cannot dedicate 50 hours, something is amiss” suggested limited flexibility.

However, the majority of Expensify personnel interviewed for this evaluation reported working fewer hours. They are able to monitor their time on the clock using a system that also prompts them to utilize their vacation time. This principle seems to reflect Barrett’s personal work ethic, as he confirms consistently working 50-hour weeks himself.

The company’s provocative recruitment advertisements displayed on SF Muni and BART in 2016 also sparked considerable debate, featuring messaging such as “We Terminate Employees.” Expensify and Barrett were resolute in this stance, with Barrett elaborating in a blog post that the company addresses situations “when a fit is no longer present.” He also included seemingly casual remarks about previous employees, but subsequently clarified on Glassdoor that no offense was intended and that Expensify bears responsibility for providing an environment where employees can flourish.

It was observed that Expensify employees are willing to dedicate significant time to the systems the company employs. Consider, for example, the bi-annual performance review process, where every employee participates in evaluating the compensation of their peers. This process is managed by a bespoke tool that Barrett likens to a neural network, repeatedly presenting pairs of employees and requesting a judgment on relative pay.

“This represents the most equitable approach possible, as no single employee wields disproportionate influence over another,” Barrett explained.

Expensify’s culture is inextricably linked to its hiring and growth strategies – joining the organization inherently involves a self-selection process, attracting individuals less likely to dwell on compromises. This could be viewed as a form of influence, but Expensify employees genuinely appear to value spending considerable time with their colleagues, even outside of annual work retreats. “I collaborate with family. Expensify *is* family,” stated former engineering director Matt McNamara in 2014, and our recent conversation confirmed the enduring strength of his relationships with former coworkers.

The team at Expensify acknowledges that their work style often demands greater effort. However, this is a cost they willingly accept in pursuit of priorities they hold in higher regard.

A Company Driven by Purpose

Conversations with personnel at Expensify revealed a crucial insight: their motivation isn't a passion for accounting itself, but a recognition of the widespread frustration and time wasted associated with expense reporting. The company even revised its branding, shifting from “Expense reports that don’t suck” to “You weren’t born to do expenses,” as Wang noted, to center the focus more firmly on the end-user experience.

Expensify operates with a guiding principle – “Live rich, have fun, and save the world” – demonstrating that making a positive impact is a significant driver for the organization. While the phrase “save the world” can be open to interpretation, it shouldn’t be dismissed lightly, even within the context of an expense management firm. The company is dedicated to proactively contributing to broader societal well-being, in addition to assisting its users.

“For a values-based company, actions must align with stated values; it requires advocating for beliefs and translating them into tangible results,” Wang explained. “This conviction led to the establishment of a dedicated nonprofit division,” she further stated.

Expensify.org, the nonprofit branch, gained considerable traction through its COVID-19 relief initiatives, though it was initially founded in January 2020. Currently, it is refocusing its efforts on its original five core areas: climate action, affordable housing, food security, reentry programs, and youth development.

Notably, Expensify.org receives partial funding through a unique system linked to one of Expensify’s products, known as “Karma Points.” For every transaction made with an Expensify Card, the company contributes 10% of the card revenue to Expensify.org. Furthermore, Expensify allows clients to activate corporate offsets, donating 2 cents to charity for every $10 processed through the platform; individual users can also opt into a similar offset program. Schaffer highlighted that this approach fosters a sense of shared contribution: “This ensures that every employee can feel a sense of purpose, rather than charitable efforts being concentrated among a select few.”

“The feeling of making a difference is a key factor in employee commitment,” Schaffer observed, illustrating why individuals are so dedicated to Expensify – its unique characteristics are what retain employees as the company continues to grow, a topic explored in Part 3 of this EC-1.