When the Magic Came: How Xpenser’s Web App Turned into Startup Gold

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create a system that can categorize a receipt for “XYZ Web Hosting” as a computer and Internet expense and another for “ABC Host” as a meals and entertainment expense.

“The whole point is to make it automatic, and we do that by applying machine learning to these repetitive, boring tasks,” Darugar says. “We make it really easy.” The system even has the capability of recognizing an overseas business expense that is incurred, for example, in euros, and using currency conversion rates to also show the amount in dollars.

Xpenser eliminates the need to stuff receipts into an envelope or wallet, Darugar says, because the technology satisfies IRS requirements for backup information that is legible, searchable, and tied to a particular event or expense. While Darugar was initially focused on tracking expenses for big companies, he says the company’s core clients now tend to be small and medium businesses with 50 to 2,000 employees.

“We have a lot of real estate agents who use this,” Darugar says. “They love being able to just SMS [text message] their mileage.”

Darugar says the next evolution of the company is focused on tracking time for professional services, and on integrating finance and administrative capabilities that will make it possible for consultants and other professional service providers to bill directly for their services. “It’s a beautiful area for us,” he says.

Today, the San Diego software-as-a-service provider has four employees and about 80,000 customers, although Darugar says those are not all paying clients because he’s been using a freemium business model. He’s financed the company himself, and says Xpenser is not currently looking for investors. “We found a business,” he says. “We found something people are willing to pay for, and it’s been self-funded. So when I take funding, it’s going to really be for the next stage of growth.”

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Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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