[Raised $97.5 million] Ep.124 - The First 100 with Jeff Seibert, the co-founder of Digits | Accounting Tech | Conference Marketing |

Jeff Seibert is co-founder of Digits, a beautifully designed accounting and reporting platform that essentially sits on top of Intuit’s QuickBooks. It then uses that data, plus API-based integrations on incoming and outgoing money in its business, to create a massive information database. Digits then begins to organize and read that data to create more intelligence around it, such as providing automatic answers to the kinds of “how” or “why” questions that an accountant or other finance pro might have around a basic financial report, the kinds of answers that previously would have only been possible through human queries, and being able to read and understand the stories behind paper trails and siloed sources of data. Digits Reports will sit alongside and is based around a search feature that Digits launched last year to help users find transactions that tap into a similar idea: answers are not found just through keywords but in results. Digits has raised $97.5 million from SoftBank’s Vision Fund, U.K. investor Harry Stebbings’ 20VC Growth, GV, and Benchmark.

Where to find Jeff Seibert:

• Website: Digits - Accounting, 
• LinkedIn (13) Jeff Seibert | LinkedIn

Where to find Hadi Radwan:

• Newsletter: Principles Friday | Hadi Radwan | Substack
• LinkedIn: Hadi Radwan | LinkedIn

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Transcript

Let's do it. Let's do it. Broadcasting from around the world. You're listening to the first 100 a podcast on how founders acquired their first 100 paying customers Here's your host Hadi Rod one Jeff, good to have you on the show. How are you doing today? I'm doing well, Hadi. It's so great to be here. Thank you for having me. Thank you for waking up early. I know it's a little bit early in San Francisco, but before we kickstart our amazing episode, I wanna introduce you to our listeners. Jeff Seibert is the co-founder of Digits, which is a very interesting tech play that is around the accounting world and the finance world. And I would love to deep dive into all the things that you've built that are amazing. We've used it before, so we've used Digits. It's beautifully designed. It was when we started sitting on top of, into its QuickBooks, where we used the data through APIs to present ourselves with reports and plethora of information that could help us do a lot of interesting decision-making. But today, you organize and create more intelligence around the data, and we can dive into that. You've raised around $97.5 million from well-known investors like SoftBank, Harry Stabbings, GV and Benchmark. Jeff, take us to the top. How did you come across this idea? Yeah, so Digits actually came out of my past company. So about a decade ago, I started Crash Lytics in a totally different space. We were doing mobile crash analysis. And through that journey, it really struck me the difference. between the product and user side of the business and the finance side. On the product side, we had A-B testing dashboards, Google Analytics, performance monitoring, all of these live insights into how people were using our product. And then on the finance side, I was waiting two to three weeks after each month to get a black and white PDF of my finances. And it just made no sense. I felt like I was flying blind. And so started Digits in 2018 to make accounting real-time and intuitive for small business owners. Obviously, that's a big challenge. It's taken us five years to build it. But we just finally launched the sort of true form, the final form of our product about two weeks ago. So we're super excited. Amazing. Take us back before Crashlytics, did young Jeff exhibit any signs of entrepreneurship as you were growing before you started your career? Oh man, I did. So when I was little, I was just obsessed with making money any way possible because I was never really given an allowance. And so I had a lemonade stand, all the classic stuff. But then in middle school, I taught myself how to program and immediately started building Mac shareware. This was back in the mid to late 90s. And so it was very basic. I was selling stuff on AOL software libraries for $5. But that was sort of my introduction to selling software. And I just became obsessed with it. So yes, ended up starting a company right out of college as well. I just love building things and bringing them to market. Amazing, amazing. When people who know your space, the accounting space and the finance space, hear your story or see your product, what strikes them as different from anything that they've used before? Yes, Digits is not your traditional accounting software and it really shows. It is very visual, it's immersively designed and it really comes from my background, which is not finance or accounting. I had zero relevant experience. I started my real career at Apple. And I'm very influenced by consumer product design. How do you get software out in massive distribution? How do you make it intuitive to people with no relevant background? And so we've really looked at accounting more from a first principles mindset of how do we make this intuitive to people who are spending their whole day, their livelihood, running their business, but they don't have the background to understand all the technical details. They just want to understand what they need to do to operate their business. If you go back to your early days at Apple, what frameworks or tactics do you learn there so that you become consumer focused and also design driven? Are there things that they push you towards or does it inherently come with their culture? It is very much baked into the culture, but I would say there are a couple of things that are just like fundamental to the company. So one is an extreme focus on like, what should the software do? And most of the time you say no, most of the time you don't want an additional feature. because it's actually just not worth the clutter in the interface in order to add that feature. And then the other is just they're obsessed with simplicity and that it can never be good enough. And so you want to add a feature to a product, but then you're constantly pushed. Wait, how simple can you make it? How elegant can we make it? How few clicks can you make it? And so it's just drilled into you that it can always be better. And it results, of course, in such a contrast between, I think, so much Apple design software and that from so many other companies. And I've gone and taken that approach and applied it to very unsexy spaces. So we tried to build crash reporting, right, developer tools that were very simple and elegant. Now we're doing the same with accounting software. Amazing. So the show is about the first 100. And I believe it's more important to have 100 people who love your product than a million people who just sort of like it. And it's seed of scale begins with these diehard fans. So if you go back to the early days, I know you started in an invite only phase. You built a waiting list of I think 600,000 people. So talk to us first about the decision of creating the waitlist and how were you able to amass an impressive number like this? Yes, you're right. This is exactly our approach. So every company I've started has been Crashlytics because one of my apps was crashing. I started Digits because I was frustrated with the finances at Crashlytics. And so the benefit to that is other people in my network I imagined would have the same issue. And so I was able to validate the problem for Digits by talking with friends and who also had started companies, other startup founders, and they agreed. And so we really went all in on using our networks at the time on Twitter, of course, in order to drive awareness of what we're doing. went with the waitlist approach inspired by Mailbox, which was also had built a huge waitlist back in the day. And it allows you to find those fans, because I completely agree with you. You'd much rather have 100 diehard customers than 1,000 people who are totally indifferent about your product. And so we used the waitlist to really identify who was obsessed and who kept nagging us to let them in off the waitlist. And those became our first 150 customers that we like. really went deep building with and designing with so that we knew we were crafting something that they would actually use and like. When do you think is the best environment to use a weightless tactic? Because if I'm selling today insurance, probably putting out a weightless doesn't work. So where do you see is the best environment and what are the key ingredients to make it successful? Definitely need to drive hype. You are. completely right. No one's going to join a waitlist for something that seems boring or expected or should be broadly available. So we were very intentional with how we crafted that landing page. It was dark. It was mysterious. It was this old school ancient catch register that looked like it came out of 100 years ago. And people were like, what is going on? It just said Digits is a counting company. And it's joined the waitlist. And so we were able to drive this mystery around it. that got people very excited about what we were doing, and of course, leaning on our prior experience and reputation we had built for making quality software. I think you need to put a couple of key ingredients in place to really drive a successful wait list. You need to be doing something very different. And it needs to be obviously different, and something that's obviously going to take time and is worth waiting for. Makes a lot of sense. You now have more than 5,000 companies using the Gist. Take us back to the early dates. So from zero to 100, with the waitlist was there to capture some of the demand. How did you scale up from 100 to 1000? This is a great question because you're right. After the waitlist, we were like, oh no, how do we really drive distribution of this? And what we learned by talking with a lot of founders is that they would often defer their accounting software choices to their accountant, which makes sense. They would pick their accountant and then the accountant would decide what software packages they wanted to use. And so we realized pretty quickly we needed to start building awareness within the accounting industry. That was totally new for me. That's not my network, not my market. How do we go do that? And so it was really interesting. We did a lot of experimentation, but one of the most successful things we found was actually sites like Upwork, because you can go and put out a job like I wanna jump on a call with an accountant and I'll pay for the call. And it was a very quick way to meet a lot of accountants and start getting their advice. And we would start asking them, like, how do you hear about things? Where do you spend time? What conferences do you go to? How do you meet other accountants, et cetera, et cetera, et cetera? And you start learning their networks. And we realized a couple core things. So the accounting industry is very insular, very tight knit, very interconnected, and it's a lot of word of mouth trust. And so you need to get accountants on your side talking about your product in order to get other accountants to hear about you. They also love seeing each other in person because a lot of accountants work from home. It can be a part-time job or shifted hours or whatever it might be. And they use these conferences to build their networks and communities. And so by meeting these folks on Upwork and through some other channels, we got to understand what conferences mattered. We then went to those conferences. And it was amazing how effective that was at rapidly getting to know 1,000, 1,500 accountants over the course of six to nine months. So it was a really interesting market to break into. And in your case, is the final decision maker the accountant, or is there a chain of people within the organization that you need to go through? Yeah, it's a really great question. So for most startups and small businesses, It's a pretty small set of people, right? It's usually the founder who's sort of in charge of the finances, but they know that they don't know what they're doing a lot of the time, right? Most entrepreneurs have no background in business, finance, et cetera. And so they trust the experts. It really depends on the business, but usually the business owner will hire the accountant. The accountant will make some recommendations. The business owner has the final say because it is their company, but often they trust their account. And so you want to win the trust of both sides. And we do that by really building strong relationships with the accounting industry and building really high quality software that the business owner respects and thinks is cool and so on. And then it makes the sale easier. Amazing. When I started using Digits, your pricing was different. You didn't have a pricing page. Your strategy was different. How did you overcome that part where this is a new product, it's reimagining accounting, it's black instead of white? How did you overcome the challenge of price? It's a great question. We, I would say, experimented a lot in the early days with different price points. We were never worried about being able to charge for it because the one nice thing about finance software is people are very used to paying for finance software. But we didn't know what price to set because our goal in the early days wasn't to really maximize revenue. We wanted to maximize usage and feedback and iteration speed. so that we knew we were building the right thing. So we set a price point that was relatively low. And we undercut the market because that made the sale easier and allowed us to grow faster than we would have if we had set this very high price point. And we learned a lot by doing that. Our pricing today is still, I'd say, relatively on the low side. And so it's like my mindset in software is 99% of American businesses are these small businesses. This market is vast. There's 30 million of them. And so I would rather build something that benefits a vast market than build very expensive software that benefits a small sort of segment of the market. Makes a lot of sense. Very interestingly, if you know what you know today, you've experimented, what were sort of experiments or learnings? I don't like to call them failures that you could share with us that you would could have avoided if you knew what you knew today. Great question. There are also aspects of the market that are a trap. So every business is different, of course. And business owners are very proud of what makes their business different and special and unique. But what that translates to is endless feature requests. Because every business owner wants one more report, one more graph, one more feature in the dashboard. And it can really quickly ruin the product. It can make it very complicated. And of course, some of the traditional accounting software in the space, I think, fell into that trap. And they added every feature, and that's why it's so difficult to use. We have had to really hold the line on what we think belongs in digits and what doesn't. And I think in the early days, we were pulled in too many directions, and we tried too many different things. Now we have a much, much higher conviction on what belongs in digits and what doesn't. And if you want extra advanced functionality here, great. Go use an additional product on top. That's probably not something we're going to specialize in. It makes a lot of sense. Is there a crucible moment or an inflection point or a pivotal decision that you could share with us that could have taken digits in a different direction than when you are where we are today? The big thing that's sort of new this year and is key with our launch is we're now very crisp on how we're bringing digits to market. And the accounting industry is very interesting and dynamic. And so if you try to introduce a a whole new accounting platform, it takes a long time to get distribution because of course these firms are very hesitant to change up their whole practice and bet on new software. And so we are doing two things. So for VC backed sort of very tech forward sort of US startups, we are working with those directly because we believe there's an opportunity to fully automate their accounting. Everything they do is digital, they transact digitally. We can bring all of that in and use our AI to automate a lot of the bookkeeping. Obviously, most businesses are not that. Startups make up a very tiny fraction of US small businesses. And so for the rest of the market, we are partnering with accounting firms to bring them modern software to help them scale their practices, better serve their customers, automate as much of that accounting as possible. But it is a lot more manual. There's a lot more cash transactions, paper checks, right? paper invoices and bills that our software isn't gonna immediately know what to do with. And so it's the same software just sold two different ways based on how tech forward the business is or not. Amazing. You started, as you mentioned, and sold your previous company Crashlytics with your co-founder, which was acquired by Twitter. You worked a little bit there. Now it's used on billions of devices. We always say that sometimes startups fail because co-founders... don't work together. And you started this company with the same co-founder. I would love to hear your thoughts on what are the key characteristics that you think two co-founders should have so that they have a long-term relationship that is successful in growing their organization. Yeah, Wayne has been awesome to work with. So the key thing and what most people, I think, make a mistake on is end up working with friends rather than someone who compliments them. And I met Wayne in Boston back in 2011. It was immediately obvious that we're obsessed with solving problems, but from very different perspectives. Because my background is coding and design and sort of product and my experience from Apple and so on. And Wayne's experience was marketing and buzz and PR and how do you build hype. And so they were very, very complementary skill sets, which I think is a lot of the reason we were so successful with Crashlytics. And that really guided our early approach to digits as well. So my advice would be is find someone, basically be very critical about yourself of where you're weak. And then go find someone that fills those gaps and complements you. And you can really see yourself working together with. Amazing. I'm pretty sure you've been across many arguments where both parties don't disagree. In that case, what sort of frameworks or strategies do you deploy to come to an agreement, two different opinions might not come. Yeah, so people are always surprised when I say this, but we have had almost zero arguments at Digits and actually the same at Crashlytics. Over the past 10 years, almost no arguments. The reason is the mindset. And I believe very deeply that the only thing that matters is the customer. And so we have no titles internally, there's no hierarchy, Digits is flat. When there's a disagreement, you immediately shift the focus outwards towards the customer. Because the customer doesn't care whose idea it was, or who said what or why. The only thing the customer cares about is what's a better product experience. And so we use that lens to really quickly eliminate any emotion from the discussion. And it's just like, OK, great. Here are the options on the table. What would the customer think about each one? Let's discuss them. And usually it becomes pretty obvious which one's better for the customer. And then we just do that. Makes a lot of sense. Thank you for sharing this. Can you share a specific moment that you're proud in building the JITS? Oh man, this was remarkable. So we were at a large accounting conference, thousand plus accountants, let's say about a year ago. And this woman came up to our booth crying. That was the first time I'd seen this sort of just in person. And she was so surprised by our software. And so struck that she was like, if this works, this will completely change my life. And it was just like so deeply emotional for her. That made everything worth it. It's like that ability to deliver such value to people is absolutely incredible. That's what I live for. Amazing. That's a very touching story. Is there a principle that you live by that has shaped you and how you do business or how do you approach startup in general? Yeah, I'd say a couple things. All lessons learned really from my first company, which we haven't talked as much about fittingly. So distribution is absolutely king. Now it's a very common refrain, but it's still too easy to not spend enough time on. It does not matter how great your product is if no one is using it. And so I love your focus for this podcast, right? If you don't have 100 plus customers using what you've built, you haven't won yet at all. And so I would focus only on getting those customers and on engineering the distribution. You really need to understand how people are going to find out about what you've built and start using it and get you feedback. And then the other is the power of just rapid iteration. And so both Crashlytics and Digits, I have run on weekly sprints now for effectively 10 years. So it's 10 years of weekly sprints. We kick off the entire company every Monday morning. Everyone shares their goals for the week. We do a Wednesday check-in meeting where everyone updates the group on how things are going, do we need to adjust scope, et cetera. And then we do a Friday show and tell, literally kindergarten style show and tell, everyone shows off what they worked on that week. And the result of that is I run in all hands every 48 hours and I have for 10 years. And so your ability to connect with your team and just like constantly see the iteration and constant learning makes. everything come together because if you improve just 1% a week, you will be in a radically different place by the end of the year than if you let yourself slip by 1% a week. It's totally crazy. How's your leadership style changed between Crashlytics and Digits today? Oh, that is a great question. You'll have to ask my team. I don't know. I think it's relatively the same. I've been very lucky where about a third of our Digits team is much of the core Crashlytics team from back in the day. And so I've worked with a bunch of these people for over 10 years now, which is just so special. And so I think we've used a lot of the very similar approaches, but you just, yeah, you constantly keep learning. I definitely spend more time now on the marketing and sales and distribution side versus at Crashlytics. I was very focused just on engineering. So I say I probably broadened my focus more, but in terms of core sort of management style, I think it's pretty similar. Amazing. You've worked a few years at Twitter as well after you sold your company. Is there any learnings that you brought to you from the Twitter culture or framers in general, two digits? And are there things that you had to unlearn again? Great question. So Twitter was the second time I've seen hyper growth. So way back in the day in 2009, I was at Box when Box scaled from 40 to 400 people. And then I was at Twitter when Twitter scaled from about 1500 to about 4000 people. The big lesson I learned was that more people are not more productive. Often they are less productive. And so one of the core goals we set when we started Digits was to build the smallest team we will need at every stage of the market. Basically, I want to build the smallest team possible to capture the market opportunity. And so today, five years in. even raising almost $100 million, the Digits team is only 36 people and of those 21 are full-time software engineers. And so it's an extremely lean team and that allows us to be really focused, minimize internal meetings, create super high talent density. And it's something I think a lot of companies would benefit from. Amazing. Thank you for sharing all of these learnings. I'm doing a new experiment on the podcast where at the end of the interview, I would ask the guest to share a business problem or a question or something they're trying to solve and ask a question to the next guest. And then that next guest would respond with an answer on solution so that you can hear different perspective. Is there a business question that is keeping you up at night or you're trying to solve that you'd like to ask the next guest? Oh, this is a great question. I would say pricing. So we discussed it a bit. As I said, we've always optimized towards pricing on the low end. For the next guest, how do they think about pricing and how do you know if you are too expensive or too cheap and how do you drive your cost and sort of revenue up, of course, over time as your business scales? Perfect, we'll note that down and I'll keep you posted as to who's gonna answer this. One last question, Jeff, what's next for Digit? Oh man. 2024 is all about scaling. So as I said, we just launched the new version of our product two weeks ago. I would love everyone to check it out. We are just digits.com. Give us feedback. We can completely reimagine and automate your accounting. Finally, I think this is long overdue. And so our goal for the next 12 months is let's just get this into market and scale it massively and see where we go from there. Jeff, this is an amazing and insightful episode. Two more questions. How can people reach you and are you hiring? Ah, great question. Reach me at jeff at digits.com, super easy email address. And we are hiring, but very selectively. So as I said, our team is quite small. We're only 36 people. Every role at the company has only one or two people doing it. So we are open for exceptional talent, but we're not going to hire a ton of folks. Thank you very much, Jeff. We wish you the best of luck. We will put all of this in the show notes, and have a great day. Fantastic. Thank you so much, Hadi. Talk soon. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play or Spotify and share it with a friend starting their entrepreneurship journey. Leave us a five star review. Your support will help spread our podcast to more viewers.