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EPISODE 20: Next Gen Accounting (w/ Zeni founder Swapnil Shinde)

The Startup Stack
EPISODE 20: Next Gen Accounting (w/ Zeni founder Swapnil Shinde)
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This week Louis talks with Swapnil Shinde, whose fintech startup Zeni launches out of stealth mode this week. 

Zeni is a full-service finance firm that blends machine learning and artificial intelligence with a team of highly experienced financial professionals to create a faster and more accurate real-time accounting experience. 

Louis talks to Swapnil about founding the company with his brother, his years-long frustration with bookkeeping, this year’s tax season hurdles and much more. 

“I think it’s very important for founders to build their companies top-down and bottom-up at the same time.

-Swapnil Shinde

🎙 Highlights Include

  • What is Zeni? How is it a new kind of accounting tool? 
  • What will finance look like 10 years from now? 
  • How should startup founders pick a finance partner? 
  • When is it time to hire a full-time CEO? 
  • What are trends in global work & accounting? 
  • What has changed coming into tax season 2021?

This Week’s Guest

Swapnil Shinde of Zeni on The Startup Stack

Swapnil Shinde

Founder & CEO @ Zeni

Swapnil Shinde is the founder & CEO of Zeni alongside his brother Snehal, who serves as the company’s Chief Product Officer. Prior to Zeni, the brothers founded Mezi, a travel booking tool that was acquired by American Express.   

The Startup Stack’s Host
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Louis Beryl

CEO, Co-Founder of Rocketplace

Rocketplace is a curated marketplace of high quality professional service providers. A 3x founder, investor, and board member, Louis began his tech career as a partner at Andreessen Horowitz. When he’s not working or podcasting, Louis enjoys cooking for his family. His pizza, he’d like you to know, is incredible. 


Full Episode Transcript

[00:00:00] Swapnil Shinde: [00:00:00] If an accountant’s wife can’t sleep, what does she say?

[00:00:05] Louis Beryl: [00:00:05] Oh, I don’t know.

[00:00:06] Swapnil Shinde: [00:00:06] Darling tell me a bit about your work. 

[00:00:09] Louis Beryl: [00:00:09] [Laughing] That’s what my wife says. That might be the best joke we’ve got on here ever. Good job. That was great. This week we’re talking was Swapnil Shinde who’s FinTech company. Zeni launches out of a stealth mode this week. We talked to Swapnil about the rapidly changing FinTech landscape  and Zeni’s rolli in it. Plus why a hybrid model that plants SaaS and real human expertise make sense for finance and a lot of other industries as well. There’s a lot to cover. Let’s get it. Why don’t you tell us a little bit more about Zeni.

[00:00:45]Swapnil Shinde: [00:00:45] So at Zeni our goal is to build an AI powered CF as a service platform. Where we can offer a turbocharged finance theme to all the startups. Basically a team that can manage all their finance functions for them. [00:01:00] Our team that will include a controller, bookkeeper and accountant, a temporary CFO, but the team will work hand in hand with our platform that then deeply integrates into the entire financial ecosystem that the startup might be using and combination of these humans and machines together and create an experience that is 10x faster.

[00:01:19] Louis Beryl: [00:01:19] And yeah, that sounds, I mean, AI powered finance team sounds really impressive. And I know your company has been, is fairly young, but it’s been growing very fast, but, you know, let me ask you, you know, let’s say I work with another, outsourced finance team or in-house finance team, why, what is the big advantage of having my finance team AI powered?

[00:01:40] Swapnil Shinde: [00:01:40] So let’s look at the landscape where there is no AI or commissioning work. In that landscape you would typically have a bookkeeper doing your books using QuickBooks to manage them. And that scenario he will wake up at the end of every month then start working on your books take three weeks to close them and do your P&L balance sheet and cash flows and output. But that output by itself, [00:02:00] isn’t insightful enough. And the founders have completely missing real time instruction to their finances as they are running the business. So everything in that world is kind of reactive and school. Plus, if you want to do bill payments and invoicing, someone else needs to handle it. If you need a temporary CFO, again, you need to engage with the third parties. Then you work with a CPA firm to figure access to the entire landscape becomes highly fragmented. Too many tools and too many finance experts at collaborating with each other. It’s super slow. There are mistakes. You need to oversee everything. But with Zeni, our goal is to give you one platform, one team that manages all the finance functions for you. And we’ll do that. We are building it from the ground up using AI, ML, a lot of robotic process automation, deep integrations with the financial ecosystem. And as a result of that, we are super fast. We are probably the only platform that can guarantee you daily bookkeeping with real time insights into your dashboard. 

[00:02:50] Louis Beryl: [00:02:50] Wow. That is incredible. Okay. Well, tell me how, how did you get into this? 

[00:02:54] Swapnil Shinde: [00:02:54] So let’s a, a pretty interesting story. So Zeni was started [00:03:00] by me and my identical twin brother, Snehal and this is our third startup together. In our previous two startups we pretty much spent I would say, 10 to 20 years building them. And while building those startups we realized first hand how painful it is to work with accountants. Like in my first startup because we had just raised, I think $1.2 million we hired a bookkeeper. And she used to come into the office twice a week or everything that she did. We had to oversee it there were a lot of manual levers. In my second startup we got a bit smarter. We said that let’s work with the finance firm. We, at that time engaged with one of the top finance firms, but the experience didn’t really change. Everything was still manual Excel sheets were flying back and forth over email. And we had to reach out to our accountant to get insights. Nothing was proactively delivered to us. So it’s hard. That is something that needs to be changed. And, uh, it’s so happened that our previous startup Mezi, an airport travel as a service platform where we offer the travel concierge to business travelers. And on the other side of the platform deeply [00:04:00] integrated into the travel ecosystem. So we scaled that back almost 10 million travelers launched in seven countries around the world. And that gave us real world experience on building our platforms.

[00:04:10] Louis Beryl: [00:04:10] So you have experience in an AI powered flat platform, but you’re not an accountant by training. So how did you think about starting a essentially outsourced accounting and CFO tool?

[00:04:22] Swapnil Shinde: [00:04:22] I would say that one stage for us was that we have lived the painpoint ourselves. So we know what the input is and what the output is that we expect from a great experience though. We don’t have the accounting expertise. We have the expertise of building app or platforms where travel agents were used. So we basically took the blueprint from, from that particular vertical and apply it to the finance verticals. So think of an airport platform where the travel assistance and are replaced by finance experts, but the enact team who build that platform remains the same. So I would say our advantage is being on the other side. And, uh, that’s was very important for us to hire the best [00:05:00] accountants controllers and finance leaders to start building this startup from ground zero.

[00:05:05] Louis Beryl: [00:05:05] What is a typical client look like for you? When is, when is a client ready to use Zeni?

[00:05:11] Swapnil Shinde: [00:05:11] So I would say our sweet spot is our seed funded startup. Though we have startups who are as widely as a YC company who has raised a few hundred thousand dollars to startups who are probably both CDC startups, but the sweet spot typically is a seed stage startup because you have just recent funding, you take accounting, bookkeeping, your finances pretty seriously. And you want a solution that can really scale with you. 

[00:05:36] Louis Beryl: [00:05:36] Let me ask you a question. If you were going to give advice to other entrepreneurs out there, you’ve been an entrepreneur yourself, you and your brother many times, you know, as they’re thinking about these finance challenges that Zeni is solving, as they’re thinking about building out their finance teams or hiring a, you know, an outsourced firm or tool like yours, what [00:06:00] are the questions that they should be asking themselves?

[00:06:03] Swapnil Shinde: [00:06:03] I think it’s very important for founders to work with a finance expert who has direct experience in their field. If it’s a SaaS based startup the finance person or the finance team that they work with need to have deep experience working with SaaS based startups. Similarly, if the startup is in the AI or hardware robotic startup or direct to consumer startup it’s very important to work with people who have deep expertise in that particular world. It’s also important to work with the finance team that can scale as you scale your startup because you might be pre-revenue when you start working with them, but they need to have experience of working with other businesses in your vertical that have scaled from zero revenues to 1 million in ARR, 2 million in ARR, even 10 million in ARR. Basically understand the depth of their expertise, but also look at the possibility of them being a partner for you, probably for the next three to four years. So look at the longterm plan instead of a short term plan. 

[00:06:58] Louis Beryl: [00:06:58] You know, for yourself as an [00:07:00] entrepreneur, I’m sure you faced many business building challenges, you know, what were some of the challenges with building Zeni at the beginning?

[00:07:07] Swapnil Shinde: [00:07:07] I would say, I think, uh, as you had rightly pointed out, right, we know. The role of an accountant from a founder’s perspective, but wearing the hat of an accountant and digging deeper into their world so that we can actually build technology that can handle the mundane tasks and they are doing is, is probably a pretty complex thing for us to understand, and then automate over, over a period of time. And then the other important thing when a whole building Zeni is the fact that we need to balance between our humans and machines pretty gracefully. So we cannot just go after growth because if we go after growth then we might end up having a big finance team. So we need to build the platform or the automation in a way that it balances the human effort that we put into supporting our customers.

[00:07:58] Louis Beryl: [00:07:58] And what was different about [00:08:00] those challenges from Zeni from your previous startups?

[00:08:03] Swapnil Shinde: [00:08:03] One of the advantages that we have is that a lot of those challenges we’re seeing though the vertical was different. So we went in Mezi we probably managed travel for a million travelers in the first two and a half years. And we had travel agents supporting that on the backend. So the human operation was a pretty human intensive but at the same time, we had to build technology that could balance the incoming requests and automate them in a way that we could scale as a company. So I think that part remains the same. So that challenge remains the same. The good news is that we have been there before and we have done that and solved that. But now we are applying it to the finance vertical which is pretty new for us. So, and it’s also pretty complex. The good news is that the data that we receive is pretty structured compared to travel vertical. So we have that ramping up, being available to us from all the different sources structured in a way that makes sense.

[00:09:02]MUSIC INTERLUDE [00:09:02]

[00:09:02] [00:09:00] Louis Beryl: [00:09:02] Hey, do you like our show? I do too. If you want to support The Startup Stack the best way to do that is by subscribing and rating us on Apple Podcasts or wherever you listen to us. Also, send Dad jokes or if you have them actual good jokes to podcast@rocketplace.com. Feel free to send us feedback there too. How long do you anticipate working with a particular client? You know, as a company grows and scales typically they start bringing finance teams in-house, CFOs in-house maybe they want to IPO. Do you think you’ll scale with those companies the whole way? Is that your ambition or is there a time where it’s like, you know what, actually, we’re kind of like seed to in-house team. What do you think?

[00:09:42] Swapnil Shinde: [00:09:42] We have some customers with whom we started working with when the revenue is probably less than 10 million in ARR and then the group around 60 million and even now more than a hundred million in ARR and they have zero people on their finance team. It’s just any supporting them in and out. [00:10:00] At the same time, we have some businesses who are a bit more complex at an early stage where they need to have subsidiaries around the world. And then the tax complications come in as a result of that. So they might hire probably a finance leader in the company sooner than later, but in that case, still the accounting bookkeeping is managed presently. So we can be complementary to a finance leader inside the company. And the advantage for the startup is that they don’t need to build the entire finance team. They can just have the CFO or that head of finance and then offload everything into Zeni.

[00:10:33] Louis Beryl: [00:10:33] If you were going to give advice to entrepreneurs, what, when would you say to them, or, you know, maybe these are your clients or other entrepreneurs like we can help you, but you really should bring a CFO in-house for certain aspects. What would, what would those things be? 

[00:10:46] Swapnil Shinde: [00:10:46] If your business is extremely complex and you have offices around the world that you need to consolidate several different entry entities at the end of every month. If the founders really [00:11:00] need a strategic partner to be on their side when they attend board meetings to make business decisions on a day-to-day basis it’s best for them to employ a full-time CFO. We do offer temporary CFO to startups but if they really want someone who can be a co-founder level person who can be in discussions with them when they’re talking to investors, et cetera, I think it’s great. And for you to engage with a full-time CFO. 

[00:11:23] Louis Beryl: [00:11:23] Yeah, that totally makes sense. I mean, tell me a little bit about, you know, you say that sometimes you have temporary CFOs and you have a lot of accountants, et cetera, on staff. What does your team look like today? 

[00:11:33] Swapnil Shinde: [00:11:33] So we have close to around 40 people. We have, uh, bookkeepers staff, accountants controllers, director of finance level leaders, senior director of finance level leaders, VP of finance and when we work with a startup we typically assign them an accountant controller tax advisor. And if they need, whenever they are in need of a temporary CFO, we can assign them a temporary CFO [00:12:00] plan they can upgrade to that particular plan anytime they need.

[00:12:02] Louis Beryl: [00:12:02] And, but you’re also building AI powered tools. So what percent of your team is doing that?

[00:12:08] Swapnil Shinde: [00:12:08] Oh, so basically we, the team that I mentioned too is just the finance side of our business, but we have probably, I would say around 20 people who are completely focused on product and technology.

[00:12:19] Louis Beryl: [00:12:19] You know, I imagine that the group of people you’re hiring on the other side, the accountants and controllers and VP of, you know, they, they have, uh, a way they’ve done things for decades. And then you have this other team, 20 people build an AI tools for accountants. Is it sometimes tough to get those two teams to communicate to each other? 

[00:12:40] Swapnil Shinde: [00:12:40] That it can be challenging and a bit tricky because I think accountants sometimes talk in a pretty cryptic language. You have to request them to repeat it at least two to three times for a layman’s to understand. I would say so basically building that bridge between the engineering team and the finance team is, [00:13:00] is very important. I would say the same problem was that in my last startup Mezi, we had where we had to build the bridge between engineers and COVID experts. The other part, I would say that is challenging is when we are hiring the finance experts that we need, it’s very important for us to look at the cultural fit when we have such people, because we want people who have. An extra tendency to focus on automation, people who have deep experience of working with startups. So we typically don’t work with finance experts who come from a background of maybe manufacturing or who have supported small businesses and don’t have any startup experience. 

[00:13:36] Louis Beryl: [00:13:36] I’d like to move a little bit to trends and what you’re seeing in the world. I mean, we just finished 2020, it’s been an, a unbelievable year in so many levels. How has your business changed in 2020 with, you know, the everything that’s going on and, and where do you see things going in 2021? 

[00:13:54] Swapnil Shinde: [00:13:54] So 2020 was, uh, uh, I would say a very interesting year for [00:14:00] Zeni. We had humongous growth throughout the year. So I would say from a business perspective, it was a very rewarding year for us. One thing that was very unique about that ear is because of this pandemic. I think all of us embraced the fact that we had to work from home that kind of encouraged us to build the remote part of our company sooner than later. So now we have several people who are located in, in seven locations in the US. I would say the pandemic wasn’t there most of our staff would be concentrated in Palo Alto where we have our head office but now we have people in Palo Alto, in New York, in Boston, in Los Angeles. And I would say we aren’t going to hire talent, very well find them in the Us. Location is no longer a criteria which gives us the flexibility, which gives them the flexibility to work with a Silicon Valley startup. And we have taken a similar approach for our India team where our main offices in Poland, but we are hiring [00:15:00] people all across the country.

[00:15:01] Louis Beryl: [00:15:01] Has that also changed where you find clients, are you finding clients all across the country and, and, or working with maybe, maybe your clients are in one area, but their teams are now all across the country. Has it changed how you work with your clients? 

[00:15:14] Swapnil Shinde: [00:15:14] The startups that we work with have completely embraced remote culture. So, and they have done that from day one. A lot of them have also gone remote internationally. So they are just having the best talent they can find anywhere in the world. And with, uh, I would say build tools, like Deal, et cetera. They are able to manage bills and benefits for these people around the world, which is extremely exciting to see.

[00:15:38] Louis Beryl: [00:15:38] I wonder, you know, you just mentioned having remote teams all around the world, uh, you mentioned companies like Deal, um, where you can manage their payroll and benefits. Are there tactical finance and tax implications that founders should know, um, as they think about. Ex having a remote and potentially [00:16:00] global workforce, 

[00:16:01] Swapnil Shinde: [00:16:01] I would say the tax implications come into the picture when you start creating subsidiaries around the world. So if you really want to establish an entity in different parts of the world, I would highly recommend you talk to a finance expert who has handled the taxation and accounting part of the setup sooner than later, probably in the best cause beforehand. Because there needs to be a collaboration between the team that manages your access and accounting and bookkeeping in the US and the team that does it locally. You will have to employ an accountant locally in pretty much every part of the world where you want to create a subsidiary. So that, that understanding that entire setup is pretty important. 

[00:16:43] Louis Beryl: [00:16:43] Is there any other 2021 tax questions that you’re getting commonly? I imagine you’re pretty busy right now. You know, what are the things around tactical advice that you think that founders should know right now?

[00:16:58] Swapnil Shinde: [00:16:58] Yeah. One of the most common [00:17:00] questions that we get is like guys, a new year has started, what do we need to do around taxes? A lot of startups, especially first time entrepreneurs are, I would say they don’t know what the, what the different tax deadlines are. What are the different, I would say, taxes that are involved when it comes to filing your corporate access. For example, typically in January, we start issuing 1099s and W-9s and W2 events for our customers. And I think Jan 31st is the deadline before which one 1099s should be issued. And then we have the next deadline, which is around March, which is for the, your Delaware franchise tax. And then comes April when you need to file your federal and corporate tax. So if you have someone by your side, managing your taxes, it becomes pretty easy for you to put this on autopilot. And especially if the same thing is managing your bookkeeping and accounting and access, then it’s all nicely integrated together. And without even lifting a finger, you can basically put your taxes on autopilot. 

[00:17:59] Louis Beryl: [00:17:59] And that’s the dream, right? [00:18:00] Put it all on autopilot. 

[00:18:01] Swapnil Shinde: [00:18:01] Yup. That’s always the dream. [Laughing] Access is Carrie. 

[00:18:04] Louis Beryl: [00:18:04] As you thought about buildings Zeni, you know, what are the things that you’re looking forward to about expanding your offering or your product going forward?

[00:18:14] Swapnil Shinde: [00:18:14] So I would say there are three areas where our focuses one is. To increase the depth of the features that we provide on our Zeni dashboard, and obviously in your dashboard is the fundamental way in which all the startups have access to real time insights into their finances. They can look at the net burn, the cash zero date, their cash bank, their operating expenses, everything in pretty much real time because the dashboard is updated every single day. There are a lot of things, or I would say at once reports that we plan to bring into the dashboard. To a level where startups typically might not even reach or need for each tool or an accountant to get insights. Everything should be available to them in a self-serve manner so that they can look at those [00:19:00] numbers whenever they want. The second area of focus for us is scaling the teams, getting the finance team as we scale the number of startups that we are supporting. So hiring the right folks, uh, when it comes to controllers, head of finance. Our accountants is going to be very important for us and keeping the culture the same that we have today is going to be very important as well. And the third would be the robotic process automation phase, which would I think reduce the mundane tasks that a lot of accountants are doing today. So increasing the percentage of automation that we can bring to the table on that front is going to be very important for us to be able to scale the finance team that we have.

[00:19:40] Louis Beryl: [00:19:40] If you could go back and give yourself advice maybe to the beginning of Zeni or as a younger entrepreneur, what would be the advice that you would give yourself, things that you know today? 

[00:19:52] Swapnil Shinde: [00:19:52] I think it’s very important for founders to build their companies top-down and bottom-up at the same [00:20:00] time. And what I mean by that is a lot of founders they stack building teams bottoms up, so they will hire people who can, probably, engineers who can stack working on different parts of the product, then probably account executives who can start getting the customers. But at the same time, I think it’s important for you to hire people top down as well. So try to build your exec team sooner than later, so that you can scale yourself faster. If you don’t do that, you end up wearing too many hats. You ended up spreading yourself pretty thin. And as a result of that, you might have execution issues and you might not be able to scale yourself as a founder.

[00:20:37] Louis Beryl: [00:20:37] Yeah, I think that’s great advice. I often advise other founders I’m speaking with to also think about scaling their management teams as soon as possible. Um, so I really agree with that one, but what about for you? What have been, you know, as you look at Zeni, Mezi what have been some of the biggest mistakes that you’ve made in your career as an entrepreneur?

[00:20:57] Swapnil Shinde: [00:20:57] I would say in that first startup [00:21:00] we actually built the team bottoms up and not top down. And I could clearly see that when we were building our first startup, we were burnt out completely. Whether it’s product being the head of product, head of engineering, head of business, head offices. If we tried to play all those functions you’re going to spread yourself super thin. And we did that during our first startup because we want to conserve cash. But as a result of that, you end up burning your soul. And that also means that you might not be completely focused on strategic things because you’re doing so many other things, which means you might be, you might not be able to raise your own sooner than later. And that is one thing that we changed in our second startup Mezi where probably in the first 12 months we had a VP of Operations, VP of {roduct, VP of Engineering. And we could clearly see the difference in the execution between the first and the second startup. And we continued that adds any [00:22:00] that probably, I would say in the first four months we had a lot of execs on the team and I think the execution at Zeni has been  even swootherr than Mezi.

[00:22:10] Louis Beryl: [00:22:10] Swapnil this has been awesome! I really appreciate you telling us more about Zeni and yeah, it was awesome. Thanks for spending the time with us today on The Startup Stack. 

[00:22:19] Swapnil Shinde: [00:22:19] Pleasure was all mine. Thank you so much for inviting me Louis.

[00:22:22] Louis Beryl: [00:22:22] For more on our conversation today, visit www.rocketplace.com/podcast. We upload a new episode every week. So if you haven’t yet made sure to subscribe to The Startup Stack in Apple Podcasts, Spotify, or wherever you listen to them. Thanks again for joining us. See you next week. 

[00:22:41] Announcer: [00:22:41] The Startup Stack written and edited by Hannah Levy, produced by Leah Jackson.

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