InDinero Co-founder Sees “Humungous” Market in Small Business Expense Tracking

As the summer term for Paul Graham’s Y Combinator incubator program builds up to its climax—“Demo Day” pitches to investors on August 24—Xconomy San Francisco is profiling selected “YC S10” startups, beginning with inDinero.

Jessica Mah had a problem. She was running a managed hosting company, renting Web server space to small businesses. Demand was skyrocketing, but keeping up with it required lots of equipment—and tracking capital expenditures wasn’t the company’s strong suite.

“We were really good at sales and operations, but our finances were completely out of shape,” Mah recounts. “We were buying thousands of dollars’ worth of servers every weekend, and I had a very hard time measuring my cost of goods against revenue. I’d pay $6,000 to buy eight servers and then we would charge each user a different price, so I didn’t know when I was going to get a return back on the investment.”

Ultimately, Mah lacked the funds to keep buying equipment ahead of demand, and shut the company down. “I’d have loved to built that into a company earning tens of millions of dollars, but we didn’t get that far because we didn’t have the capital,” she says.

Many small businesses have the same problem tracking cash flow and keeping their runway clear. Perhaps the only unusual thing about Mah’s experience with the managed hosting company was that she was a teenager at the time.

Mah finished high school in 2006 at age 15 and spent a couple of years at Bard College at Simon’s Rock, then a couple more at the University of California at Berkeley. With freshly minted computer science degrees, Mah, now 20, and her Berkeley classmate Andy Su, 19, are building another company—this one dedicated to helping other small business owners get a better picture of their finances. It’s called inDinero, and it launched just over a month ago with backing from Y Combinator and other investors.

InDinero co-founders Andy Su and Jessica Mah

InDinero co-founders Andy Su and Jessica Mah

What Intuit’s does for individuals—pulling real-time data from their bank accounts, credit card providers, lenders, and investment accounts, and presenting it all in one simple Web-based dashboard—inDinero does for small businesses. “When your business is growing, seemingly simple things like money can quickly become complicated and turn into your biggest source of stress,” says Mah. “We have people signing up for inDinero because they don’t know what’s going on in their business on a day-to-day basis. They may have a bookkeeper that they see once a month, but that is not enough visibility.” (See a video summary on page 2.)

Mah uses inDinero’s own inDinero account, for example, to check how much the startup is spending on the kinds of random expenses that are difficult to track without carrying around a pile of paper receipts. “I didn’t realize until recently how much money I was spending on food and how much I was paying contractors to speed things up for us,” Mah says. “If I didn’t have inDinero, I would have to wait until the end of the month, and then I’d say ‘Why didn’t I start tracking this sooner?’ So I love my own product.”

InDinero, like most Web startups these days, has a tiered price structure. Very new or small companies—those tracking up to 50 transactions a month—can use inDinero for free. For $29.95 per month, companies can track up to 500 monthly transactions, and for $99.95 per month inDinero removes the cap entirely.

With “thousands” of small business owners already using the service, according to Mah, inDinero is one of the few companies in Y Combinator’s summer class that’s already earning serious revenues. In addition to the $18,000 invested by Y Combinator [corrected: not $35,00 as this sentence previously stated], inDinero already has … Next Page »

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Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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