Expensify's Transformation: From Silicon Valley to Global Success

Expensify's Shift Away From the Bay Area

Expensify stands out as a remarkably ambitious software company that has largely moved away from basing its operations in the Bay Area.

Early Roots in San Francisco

The company’s beginnings are closely linked to iconic San Francisco locations. Initially, the founding team operated from a Peet’s Coffee shop on Mission Street.

This was followed by a period of working from a penthouse lounge near the Caltrain station at 4th and King. Subsequently, they occupied a small office, and then a slightly larger one, within the Flatiron building close to Market Street.

A Global Transformation

Although Expensify maintains an office on Kearny Street, it has evolved beyond being solely a San Francisco or Silicon Valley-based company.

The organization now boasts a truly global presence, with employees distributed worldwide – a transition that occurred even before remote work became mainstream due to COVID-19.

Embracing a Global Identity

“Our performance improved significantly when we ceased identifying as a Silicon Valley company,” explained CEO David Barrett in an interview with TechCrunch. “We redefined ourselves simply as a global entity.”

This global outlook prompted the establishment of a substantial office in Ironwood, a small town in rural Michigan.

This expansion ultimately spurred a cultural shift, leading the company to diminish its focus on the Bay Area and broaden its reach with offices internationally, alongside its headquarters in Portland.

Remote Work and Efficiency

Given its origins with founders described as “internet pirates,” it’s logical that Expensify would empower its workforce with location and lifestyle flexibility.

However, the question arises: how does the company maintain operational effectiveness, achieving $100 million in annual revenue with a team of just over 100 employees?

Attracting Global Talent

As detailed in Part 2 of this EC-1 analysis, this staffing efficiency is partially attributable to the company’s culture and its hiring practices.

Expensify successfully attracts top-tier talent from around the globe by offering benefits such as year-round remote work options and competitive salaries equivalent to those offered in San Francisco, regardless of employee location.

Furthermore, every employee, along with their partner and children, receives an annual, fully-paid month-long “workcation.”

Adapting to the Future

Ultimately, the core narrative centers on a company’s capacity to detach itself from its initial geographic constraints.

This involves a willingness to embrace new locations and cultures, and to relinquish the past in pursuit of building a future-oriented organization.

An Opportunity Found in Ironwood

The town of Ironwood, Michigan, with a population of approximately 5,000, is situated in the scenic Upper Peninsula. It initially came to the attention of Expensify through Tony Zakula, a resident of the region known as a “Yooper,” who began exploring the possibility of hiring entry-level software engineers on a trial basis in 2011.

Zakula’s father had previously attended Gogebic Community College, and facilitated an introduction to Jim Halverson, a veteran IT instructor and e-sports coach. Halverson subsequently connected Zakula with former students, including Tim Szot, who operated a local computer repair business. Recognizing Szot’s programming aptitude, Zakula brought him aboard at Expensify in 2013, where he remains employed today.

Szot reflected in a 2014 Expensify blog post that, “Working for a San Francisco-based technology company wasn’t something typically considered by those living in a town of fewer than 6,000 people.” However, the opportunity was enthusiastically embraced. Matt McNamara, Expensify’s former engineering director, remembers realizing during conversations with Szot and others that they “desired challenging work that utilized their skills, despite living in a location offering a desired quality of life,” even before remote work became commonplace.

Zakula believed a stronger partnership between Ironwood and Expensify was achievable. He observed that the startup faced difficulties with offshore receipt processing, while the local community possessed both the willingness and qualifications to handle these tasks, alongside more complex assignments.

McNamara recounts receiving a persuasive email from Zakula advocating for increased investment in Ironwood. Barrett acknowledges that he greatly benefited from considering Zakula’s proposal. He stated in an interview with TechCrunch that the area “possesses an extraordinary talent pool that remains largely undiscovered.”

Expensify’s Ironwood-based workforce undertook a diverse range of responsibilities, from advanced human verification and team leadership to software development. Halverson actively supported the latter through his instruction at Gogebic. He explained that, “To better align with Expensify’s requirements for junior developers, I developed a specialized course within the IT program, focusing on skills crucial to the company at that time.”

The caliber of the local talent base proved to be a significant surprise for Expensify. Barrett noted, “We were astonished to find exceptional individuals outside of San Francisco, and, in fact, these individuals often surpassed those we encountered there.” This realization provided a competitive edge: “Tech companies aren’t actively recruiting in Ironwood, Michigan,” he pointed out.

Alongside Zakula, McNamara was instrumental in establishing Expensify’s Ironwood office, which he frequently visited and managed until his departure from the company in 2017. His initial task involved securing office space for local employees when they outgrew the facilities provided by Halverson at Gogebic’s computer labs, which offered high-speed internet access. Expensify continues to operate from this office, located in a strip mall along the highway, and while hiring from Gogebic has slowed in recent years, the local team remains remarkably consistent.

Tom Bergman, Ironwood’s community development director, confirmed that Expensify is a major employer in the town, both directly and through contractors. The company also serves as a model for the type of economic development the city is striving to achieve. Unusually for a city of its size, Ironwood has been pursuing this strategy for decades and may now benefit from the increasing acceptance of remote work in a post-COVID environment.

Will the situation evolve after COVID-19? Bergman and others in the region are optimistic, believing that Michigan’s Upper Peninsula possesses unique advantages over other rural areas in the United States. Having moved beyond the era of the iron boom, the Gogebic area is now focusing on its natural attractions, including its proximity to Lake Superior, waterfalls, the Northern Lights, and ski resorts. This natural environment provides a variety of outdoor activities that resonated with Expensify’s adventurous team.

Even prior to the pandemic, the region was presented as an attractive location for remote workers, as highlighted by Yooper Alex Wellman in a Medium post from January 2020. Featuring an image of Expensify’s Ironwood office, he suggested that “the UP is well-positioned to attract a new generation of location-independent entrepreneurs” and could potentially “persuade more Silicon Valley companies to relocate operations to the area.”

The appeal of remote jobs in the area is largely due to their above-average compensation. Expensify further distinguishes itself by offering equal pay to all employees, regardless of their geographic location.

A Shift Away From Silicon Valley Norms

Barrett highlights that Expensify adopted a principle of fairness in employee compensation as early as 2009. The company’s policy involved compensating all personnel globally based on San Francisco wage standards. This decision stemmed from the belief that an employee’s location should not influence their value to the organization.

This approach proved advantageous for Ironwood and ultimately extended benefits across the entire company. When the higher earnings of Michigan-based staff compared to those in San Francisco were brought to attention, it sparked a broader conversation, as Barrett recounts.

The subsequent developments at Expensify were particularly noteworthy. As previously discussed, mentorship is deeply ingrained and actively promoted throughout the company. This mentorship extends beyond professional development, encompassing personal aspirations. CFO Ryan Schaffer explained that the program focuses on identifying the mentee’s life goals and providing support to achieve them.

Interestingly, many of these goals centered around relocation. Expensify didn’t merely permit employees to work from anywhere; it actively facilitated this through its mentorship program, addressing potential obstacles. Schaffer himself relocated to San Diego as a result. In other instances, more extensive planning was required, such as Director of Product and Customers Jason Mills assisting his mentee, Tyler Karaszewski, in arranging a multi-month sailing trip in the Caribbean with his family and pet, all while adhering to Expensify’s core principles: “Get shit done” and “Don’t ruin it for everyone else.”

Karaszewski, speaking from his boat, emphasized that this was possible at Expensify “due to the absence of rigid requirements, such as mandated hours, time zones, office presence, or project assignments.” The company empowers employees to structure their lives according to their preferences.

However, this flexibility necessitates self-discipline from employees. Without prescribed structure, individuals must proactively implement their own organizational systems. The key is ensuring that sufficient work benefiting Expensify is completed, Karaszewski noted.

Beyond flexibility, Expensify’s success in this area is rooted in its pioneering of remote work best practices long before they became widespread necessities.

Slacks, Onshores and Offshores

Expensify prioritizes strong writing abilities during its recruitment process, recognizing their fundamental importance in all roles. The company’s internal culture heavily emphasizes written communication; employees are encouraged to pursue independent work, provided they keep colleagues informed – typically through written updates. Furthermore, with the adoption of a “generalist” approach, comprehensive documentation is crucial. To avoid creating bottlenecks, each task’s procedures must be recorded in a clear, accessible manner for all team members.

This system relies heavily on asynchronous communication, which is exceptionally well-established at Expensify. A prime example is the use of “Slack meetings,” where participants contribute written comments within a designated timeframe designed to accommodate multiple time zones. This practice became essential in 2016, coinciding with the opening of offices in the U.K. and Australia to enhance market coverage and provide round-the-clock customer support globally.

Complementing asynchronous methods, Expensify also fosters team cohesion through in-person gatherings. These company-wide events, known as “offshores” or “onshores” depending on their location and duration, have been a cornerstone of Expensify’s culture since its founding.

The “offshore” concept originated at Red Swoosh, Travis Kalanick’s venture prior to Uber. Following Barrett’s appointment as engineering manager in 2005 and subsequent team expansion, the team embarked on a workcation to Thailand, followed by similar trips to Mexico and India. This tradition seamlessly transitioned to Expensify, with the entire team undertaking a month-long international trip annually since the company’s inception, visiting destinations like Croatia, Vietnam, and Uruguay, among others.

While the core idea has persisted, the nature of these trips has evolved alongside Expensify’s growth. As early as 2015, the SF Chronicle described the trips as “lavish,” a significant departure from the “blood, sweat and ramen” conditions at Red Swoosh. This level of expenditure was made possible by profitability, but also became necessary as the team diversified, encompassing employees at various life stages.

2014 marked a pivotal year, requiring Expensify to integrate two distinct cultures. Barrett explained, “It was a super high-tech, technophile San Francisco [culture] versus basically rural Michigan.” Overcoming this “huge cultural clash” proved challenging initially due to the contrasting backgrounds. Expensify addressed this with an “onshore” – a shorter, U.S.-based version of the offshore – bringing the entire team together in Ironwood.

The offshores also became more inclusive, acknowledging that some Michigan-based employees had families who were unable to join month-long international trips. Consequently, partners and children are now welcomed on the annual excursions. Over time, the distinctions between the Ironwood staff and other employees diminished; Barrett himself became a father in late 2014, followed by other team members. “Now I think we’re very blended, in the sense that we’ve got people at every stage of life,” he stated.

Expensify’s Transition and Portland Headquarters

Looking back, the series of decisions made by Expensify ultimately facilitated the relocation of its headquarters to Portland, Oregon. If San Francisco was simply a location, then establishing the primary office in a more family-oriented environment became a logical step.

Choosing Portland as its headquarters reflects core aspects of Expensify’s culture, including a commitment to fairness and a long-term strategic outlook – one that doesn’t rely solely on remote work. Expensify didn’t simply lease office space; the company purchased a building and is currently adapting it for a post-COVID work model.

Early Considerations and Planning

The move to Portland was under consideration for some time. Former engineering director McNamara remembers a vacation with CFO Schaffer and Barrett in late 2015, jokingly suggesting that Barrett likely already had a plan in motion. Barrett was already familiar with the city, having resided there during the summer of 2005 when he was recruited by Kalanick for Red Swoosh.

A subsequent step involved the entire Expensify team spending a week exploring Portland in 2016, prior to officially opening an office there in the summer of 2017.

Motivations Behind the Relocation

Barrett’s motivation stemmed from both personal and company-wide considerations. He desired “a backyard with a tree swing,” something unattainable in San Francisco. He also recognized that the high cost of living in the Bay Area threatened Expensify’s goals related to employee retention and fairness.

McNamara recalls the Portland move being driven by a desire to “reduce the financial burden for individuals who wished to live near headquarters, regardless of their family circumstances.”

A Flexible Work Model

Expensify ultimately offered its employees flexibility. The main office is now located in Portland, where Barrett resides, along with some current and new employees. However, relocation wasn’t mandatory, and employees could continue to work from the San Francisco office, as well as locations in Ironwood, London, and Melbourne.

New York City was also being considered as a potential location, and remote work options remained available to all employees.

The Portland Office as a Hub

The Portland office is designed to serve not only local employees but also as a central meeting point. According to the Portland Business Journal in 2019, the 44,336-square-foot building is large enough to accommodate the company’s approximately 125 employees for company-wide gatherings several times a year.

The space is also intended to host community events, a practice that was common before the COVID-19 pandemic. Barrett expressed a desire to “share this beautiful space with the wider community.”

An Iconic Building

Expensify’s Portland building is a notable landmark, representing a significant investment for the 13-year-old expense management company. Constructed in 1916, the First National Bank Building is listed on the National Register of Historic Places and has been compared to the Lincoln Memorial in Washington, DC.

The interior design, overseen by ZGF Architects, also makes a strong impression. Partner Sharron Van der Meulen believes that office design should clearly reflect a company’s mission and culture upon entry.

In Expensify’s case, this translates to a focus on transparency and the inclusion of large communal tables.

Adapting to a Post-COVID Workplace

Recently, the architecture firm was tasked with creating a “restaurant and café atmosphere” within the office, reflecting Barrett’s belief that offices must now compete with the appeal of such spaces. He stated that while working from home has some benefits, it isn’t the ideal long-term solution.

He emphasized the value of having the flexibility to work from home when desired, but not being confined to it.

Commitment to a Physical Presence

Even before the COVID-19 pandemic, Expensify did not anticipate a fully remote future. The $10.8 million purchase of its headquarters in August 2019 underscored this commitment, making it “the only tech company to own its own building in downtown Portland.”

While other tech companies like Airbnb, Amazon, Google, New Relic, and Squarespace have a presence in Portland, Expensify distinguishes itself through its dedication to the city.

Long-Term Vision

This commitment extends beyond Portland, reflecting Expensify’s overall long-term perspective. Barrett stated in 2019, “I know this sounds pretentious, but people used to build companies that lasted 100 years and I want to try to do that. We are making decisions based on a genuine belief that we will be around for a long time.”

This long-term vision, as will be discussed in Part 4 of this series, influenced some of Expensify’s key decisions regarding its technology infrastructure.

Expensify EC-1 Table of Contents

This EC-1 was published serially from early May through early June.

• Introduction
• Part 1: Origin story
• Part 2: Culture
• Part 3: Expansion and remote work
• Part 4: Engineering and technology
• Part 5: Business model

Additional EC-1s are available on Extra Crunch.