The San Francisco fintech startup Digits has developed a Google-search-like capability for small businesses to help them, and potentially banks, understand their finances.
The software lets small businesses type a company name and a word like "fee" or "how much has the company spent on marketing in the last six months?" into its search engine. The application searches through accounting ledgers like those in QuickBooks as well as bank account data, credit card data, invoices and more to provide answers.
The company’s co-founders, Jeff Seibert and Wayne Chang, in 2011 co-founded Crashlytics, where they developed technology that identified technical problems on mobile apps. The company was sold to Twitter in 2013, and Seibert became head of consumer products for Twitter and spent hundreds of hours one on one with CEO Jack Dorsey. Seibert was also featured in a Netflix documentary, "The Social Dilemma," that’s been watched by 100 million people. The Crashlytics technology today runs on 5 billion smartphones.
Last year, Seibert and Chang formed Digits (not to be confused with Digit, the automated savings app that has morphed into a challenger bank). Digits' technology offers small businesses a financial data platform designed to help them understand their transactions and business information. The company wants to partner with banks, both to draw banking data directly into its application and to let bankers use the software to analyze potential borrowers and existing clients. In an interview, Seibert explained how the technology works and where it differs from cash flow reporting apps.
Tell me a little bit about Crashlytics.
JEFF SEIBERT: We started Crashlytics in 2011, realizing that apps were crashing. About 10% of all App Store reviews mentioned the word “crash” because the mobile ecosystem was so young. We built a technology that developers could put in their app that did nothing until their app crashed. And then within two seconds, we would tell them the line number of codes that they had to go fix. We got very fortunate with timing. The mobile ecosystem was exploding, and we scaled like crazy. So in 12 months from launch, we were on 300 million devices. Twitter acquired us [and] made it free and part of their mobile platform. And then Crashlytics was acquired by Google in 2017. And today it’s on 5 billion phones. It's on effectively every smartphone on earth, and it’s become the de facto crash reporting platform for iOS and Android. It reports 2 to 3 billion crashes a day.
I'm not aware of it, I guess it's happening behind the scenes.
That was the idea. It should just work and help the app developers make their apps more resilient.
So your new company, Digits, is helping businesses search their own information for important details or things they need to know.
Yes. And it came from our experience with Crashlytics. We had all this technology on the product side to understand how our product was doing. And my co-founder and I were frustrated that the business side had no technology. We were waiting a couple of weeks after each month to get our financial reports. They were PDFs and Excel sheets. Every question we had took our accountant hours or days to run a custom report and answer. And so we started Digits with the goal of building a real-time finance dashboard for business owners to basically make this all instant. Our code name for it was Cashlytics. The idea was, can we tell you about your cash just as we were telling you about your app before. Instead of having to email or call your accountant, you can just type a few characters into Digits, and we instantly give you a full financial analysis of whatever you want.
What does Digit Search do, literally crawl documents and software on a network kind of the way Google does?
It’s a similar concept. To set it up, all you do is connect it to your QuickBooks. About 80% of American small businesses run on QuickBooks. We pull in and crawl your entire financial history. From that transaction data, we assemble a learned model of your business. We identify your vendors, your customers, your budget categories, your employees and all the different factors that feed into your business. And then we bundle that into an interface where you just type in, say, “Uber,” and we give you the trend lines and history of all your interactions with Uber. You can see if your sales team is overspending on clients, reps or whatever it might.
Is it strictly based on data that’s been input into QuickBooks?
Yes, except for the real-time data. Your historical data is in QuickBooks; all your current data from this week, this month, today is in your bank accounts. So we connect to your bank accounts and corporate credit cards and payroll providers. And we merge all that data in real time. So we're not waiting until the end of the month for your accountant to close the books — we're pulling in all that information in real time as it happens. And we let you search that too, so you'll see the full picture up to the present day.
Are you working with a data aggregator like Plaid to get that data?
Yes, it’s powered by Plaid. And then we're also working on direct banking deals so we can get that data directly.
What's the advantage for you of getting the data directly from banks?
It's faster and more accurate because it goes through fewer middlemen. We want the raw data, so we know the ground truth of what happened to your business.
Which banks are you working with?
We're not announcing any partnerships yet, but we will have some news to share later this year.
Will the banks have any other involvement besides giving you their customer data?
Not currently. Their clients keep coming to them because they want a more modern view of their cash flow, their profit margins and such. And the banks aren't really able to provide that.
We are starting to see
What you're seeing is there's a lot of one-off tools. There's a lot of point solutions that have come out that maybe do cash flow well, but they don't let you do anything else. We've taken a totally different approach where we have this complete picture of your business and what we call a living model. So yes, we can show you cash flow. We can show you an individual vendor. We can show you an individual customer. It's a more holistic solution to the space than needing to sign up for a half dozen tools that each do one small piece.
Digits Search is the first product we've released. We'll have more products on top of that.
What are some of the use cases for that ability to search by individual vendors, individual customers? Is it so that before you're going to meet with a client, you might be able to see how they have been paying their bills and that kind of thing?
There's a couple of scenarios. One of our customers is doing exactly that. They have a bunch of customers, the customers pay on different terms, and when they're going to either renegotiate a contract or meet with the client and update, they want to know what they paid and what they have. And so instead of having to go ask their bookkeeper or thumb through their email or their bank accounts or whatever, they can literally just type the customer name into Digits and they see it instantly. A lot of first-time business owners don't understand what accrual accounting is and what it even means. And so when they see stuff booked as accounts receivable, they think they have the money already. And so we've actually had a lot of customer discussions trying to make that more intuitive for them, so they really understand what has been paid and what hasn't.
Another example is one of our customers relies on Facebook ads a lot for their business. And so when they're trying to determine what their marketing spend should be, it's a lot of manual labor to collect all that stuff and go back and look at their accounts. And now with Digits, they literally just type "Facebook" and it shows up.
Is there a particular type of company or segment that you think will really gravitate toward this?
We have customers all the way from an individual surgeon in San Diego, who's been using Digits to monitor how much he's spending on COVID-related equipment, up to a couple hundred-person growth startups, and everything in between. There are restaurants, flower shops, tech startups. Every business is dealing with money. Most run on QuickBooks, and it gives them this outdated look at the world. With Digits, we've brought this together for them and made it easy.
