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 “a few hundred grand” in the bank courtesy of angel investors, and hopes to raise a few hundred more after Demo Day, Mah says.

But that’s just the start of what the company will need if it is to grow as large as Mah hopes. “We’re going to hit a trillion dollars one day,” she predicts—meaning that the money tracked through inDinero’s system will eventually surpass a trillion dollars a year. That’s not as outlandish as it sounds, considering that a single inDinero customer, according to Mah, is already using the tool to track tens of millions of dollars per day.

“It’s a humungous market, many billions huge,” Mah says confidently. “If you look at it, Intuit has less than a 25 percent share among businesses for its QuickBooks product. And since our business targets the 90 percent of business owners or entrepreneurs who will never touch QuickBooks, we are destined to be a billion-dollar company.”

In a sense, Intuit’s failure to create a Mint-like alternative to the 12-year-old QuickBooks accounting package has created the opening for Mah’s startup (just as PayPal’s failure to innovate in online payments has created an opening for WePay, a 2009 Y Combinator startup that I profiled last month). Mah says that most of the small business owners she’s interviewed track expenses and revenues in one of two ways: either they have their own Excel spreadsheet, or they hand over everything to a bookkeeper running QuickBooks. “They don’t have the patience to learn QuickBooks themselves; it’s built for accounting professionals, it wasn’t meant for entrepreneurs,” Mah says. “So they try not to even give it the light of day.”

But even if entrepreneurs were willing to master QuickBooks, it wouldn’t give them immediate answers to key questions like how long a company can keep operating on its current cash hoard. At inDinero, by contrast, a “cash runway” gauge is one of the most prominent elements of the dashboard. The program projects income and spending based on past patterns, and when there’s less than a month’s worth of cash left, a simulated needle dips into the red zone.

Sample inDinero dashboardIn an upgrade coming this month, inDinero will add more forecasting features designed to help companies plan for the future. “It starts with us essentially guessing what [performance] will look like based on the past finances of your business,” Mah says. Then users can start tweaking the details. “You can think, okay, if I upgrade my servers, is that affordable? How about if I cut here or there to compensate for that, will my company survive? What if growth is slower or faster? I think that’s going to be really key, because to date every single financial application has been about the past.”

InDinero is also busy adding features such as an integration with FreshBooks, a popular Web-based invoicing service. Mah says her team has run up against its biggest technical challenges in three areas—connecting with all the different banks and other financial institutions where businesses put their money, building machine-learning tools to automate tasks like the categorization of expenses, and creating the forecasting software, which gets more accurate as users accumulate more data. But Mah says the five-employee company has just as much time into perfecting its user interface. “People compliment us more on our design than anything else,” she says. “There’s cool stuff under the hood, but most people don’t care about that as long as it works.”

That’s one realm where being part of Y Combinator—which typically asks for a 6 to 7 percent equity stake in its startups, in return for stipends, mentorship, and abundant networking opportunities—has really helped inDinero, Mah says. “We found a great designer through Y Combinator alumni, and we’ve had incredible connections to [financial software experts] who, if we’re successful, will probably have saved us millions of dollars,” Mah says. “Giving away x percent of our equity to Y Combinator for all that was an easy decision.”

For Xconomy readers interested in getting more information about inDinero’s latest features, including forecasting, Mah has set up a special e-mail address. Go to, sign up for an account, then send your inDinero login email address to

After Mah gave me the full scoop on inDinero, I asked her to summarize the company’s mission on video. Here’s the result:

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

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