When David Barrett was living in San Francisco’s Tenderloin neighborhood 10 years ago, he passed by the same homeless people every day. Barrett wanted to help them but was conflicted about handing out cash.
Many disagree over the ethics and efficacy of giving out money, and Barrett wondered whether giving cash to people on the street was really the best way he could help them.
But then he had an idea. “I wanted to help people on the street by giving food,” Barrett said. “So I thought, what about a gift card that would be the exact amount [of the meal], around $10 per day, and would only work at restaurants that don’t serve alcohol?” (At the time, many of the city’s homeless facilities would only admit people who were sober.)
Barrett knew he was onto something. Not only did he have a way to help homeless people in San Francisco, he also thought he had a great investment opportunity. He started pitching the idea to banks in hopes of securing a business loan and was given a swift reality check.
“The banks were like ‘no way, this is going to be so wasteful and risky,’” Barrett said. They highlighted the many, many risks involved with his idea like the fact that there was no way to deal with PCI compliance, money laundering, money transmission licensing and many other complications. The banks also pointed out that Barrett had no real business model — he was just giving gift cards away to people in his neighborhood.
Never one to be easily discouraged, Barrett was confident he could get the gift card idea off the ground if he could create a safer business idea as a front. “I needed to make the idea sound boring,” he said. “I thought, ‘what is the most boring application of a credit card I can imagine? ... expense reports!’”
When Barrett went back to the banks with his new idea, they were intrigued. They asked if the platform could scan receipts, if it had an iPhone app and if it could export to accounting software. Barrett replied, “yes, absolutely” to every question even though none of it was true at the time. “The original iPhone camera was so bad it made completely illegible receipt images,” Barrett said. There’s no way the phone’s camera would be good enough for this new expense report business.
But he would worry about that later. The banks were on board.
People Really Hate Expense Reports
At TechCrunch 50 in 2008, Barrett and his co-founders announced Expensify. It was billed as “the corporate card that connects directly to your expense reports.”
Essentially, it was the same idea Barrett needed to carry out his plan for feeding the homeless but packaged as a more attractive option for businesses.
And he was right about the mass appeal — strangers came up to Barrett at the conference, hugged him and thanked him for how much time Expensify was going to save them.
But he didn’t care much about any of that. He just wanted a way to get food to hungry people.
Then, the economy collapsed. In 2008, Barrett lost his savings and his job — though interestingly, he wasn’t laid off to cut corners. He was fired from cybersecurity and cloud service provider Akamai for speaking out against Warner Music's proposed music tax in an interview with Portfolio magazine.
In any case, he was forced to take the expense report part of his plan (the safe part) seriously. Luckily, the iPhone camera had recently improved a lot so it was possible to take legible receipt photos. And the Apple app store was now open, making it possible to freely distribute his new app.
But Expensify’s early success is really a testament to how much people despise expense reports, Barrett said. The product was a hit.
A Socially Conscious Credit Card
By 2019, Barrett had built Expensify into a successful tech company that continued to grow. But he couldn’t stop thinking about his original mission to help his fellow San Franciscans who were hungry and without a roof over their head.
Last February, Expensify produced a Super Bowl ad, featuring 2 Chainz and Adam Scott, which Barrett felt was a turning point. “After we did a big thing like the Super Bowl ad, it felt like we’d really established ourselves in the market,” he said.
Internally, Barrett said his team had been thinking more about how to engage with the community in San Francisco using the tools they had at their disposal. He also knew the company had the time, resources and experience to take on their next big project.
“Ten years later, I actually know about the (expense report) space,” Barrett said. “It’s not all fiction.” It was time to make the corporate card happen.
The Expensify card is not a stand-alone product, but rather an extension of the company’s current expense management tools. Most corporate cards only offer perks to business owners — things like AWS credits or discounted Stripes fees — but offer zero perks to employees.
Expensify wanted to offer more advantages to employees rather than owners. They began researching personal card reward programs and found that 1 percent cash back was the most common benefit. But the margins on most of these cards are so thin that they’re literally measured in fractions of pennies.
Rather than divide fractions of pennies between thousands and thousands of people, Barrett thought, what if we consolidate the fractions and give them to people who could really use them? He began looking at other corporate philanthropy efforts and found that Amazon Smile, which launched in 2013 and lets you donate money to a charity of your choice when making a purchase, was closest to the model he had in mind.
“Amazon Smile has donated $156 million to date, which is impressive,” Barrett said. “But these donations are spread across a million charities, so about $156 per charity.”
He decided that it made more sense to concentrate donations and create meaningful differences in fewer places. When you use Expensify’s corporate card, Expensify.org donates to a specific charity depending on the type of purchase you make. For example, paying a bill with the card will trigger a donation to help someone recently incarcerated get back on their feet; buying a meal will donate money to help children who have trouble paying for school lunches.
One Step at a Time
It took a decade, but Barrett finally got to see his original dream realized — and it couldn’t have come at a better time. San Francisco has one of the highest rates of homelessness in the United States and the city’s homeless population has increased by 17 percent in the last two years alone.
Barrett understood it would take more than handing out a few gift cards to his homeless neighbors to make a dent in the problem but that has never deterred him.
“The metric of success can’t be homelessness is now solved,” Barrett said. “It’s how many people we can get off the street.”
