Is the shuttering of expense management app maker ClearSpend a sign the space is ready for consolidation or just an unfortunate circumstance?
In my career, I’ve covered the rise and fall of many industries, beginning with the dotcom bubble. One thing that period taught me is that technology markets tend to find their level over time, but there’s always more to individual company stories than meets the eye.
Last week, when the news hit that expense management company ClearSpend had ceased trading after only 10 months in existence, the initial reaction was to think they were simply a victim of a marketplace that had little room left. Much like the 1990s, when the Internet was in its infancy, one had to wonder how many online pet stores or CD vendors were needed.
Expense management is a similarly crowded field and accounting professionals difficult to win round. But is that all that happened with ClearSpend? Around the same time as the ClearSpend news broke, Brex announced a major pivot away from a core business segment (SMBs) to focus on larger enterprises.
Can expense management and tracking companies like Fyle, Rydoo and Corpay One survive in a market currently dominated by the likes of Expensify, Bill.com (which also bought Divvy) and SAP Concur? Perhaps there is still room for all of the above to rise in their own way, but let’s dig further into what happened to ClearSpend.
AccountingWEB first learned of difficulties from accountants on social media, who reported that planned demos and meetings with ClearSpend had been cancelled and messages left unanswered.
As we understand it, on the morning of Friday June 17, more than 30 ClearSpend employees showed up to work (or logged in) to find a Slack message from the Chairman of ClearSpend, Hugh Warner, stating the company was ceasing operations. This was just a day after CEO Jeff White had publically announced his departure from the company via LinkedIn.
According to former ClearSpend Head of Marketing Nate Meadows, this is how it went down: “On Friday June 17, without warning or advanced notice, the remaining ClearSpend team was informed over Slack that the company had filed for bankruptcy, and all remaining employees were immediately terminated with no severance or compensation,” Nate told AccountingWEB.
“[CEO] Jeff [White] had presented Hugh Warner with two different investment strategies and opportunities, to which Hugh turned them both down. He had felt they were not in his best, personal interest.”
Nate continued: “We were told our runway was good until next February (2023) and last week we found out our CEO left over confrontations with the Board. We needed to make payroll and I felt our CEO was misled by the Board and he was looking to secure funding for us around the clock. I think he didn’t feel he could successfully run things if they didn’t give him visibility.”
Nate also noted the company’s plans to attend the recent Scaling New Heights conference in Orlando, spending nearly $80,000 on sponsorship, travel and shipping costs. ClearSpend did not attend the event due to the timing of the announcement and at time of writing its equipment and materials are still in Orlando.
“We had a great culture in the US with Jeff at the helm, and we were doing great things, and we rallied to take on all the expense apps out there and this [notice] was a punch to the gut,” Nate said. “Within two weeks this all fell. I think Jeff was our best leader, but I think even he was kept in the dark about the transparency. You’re only as good as the intelligence you have and I still feel he was misled. Now over 30 people are out of a job.”
AccountingWEB was able to speak with Jeff White, who would only go on record stating: “We were doing great things [at ClearSpend] seeing 10 demos a day. There is demand for what we were doing, the entire ecosystem is ripe for disruption and competitors in this space haven’t severed this market the way that we did. Some are just focused on mid-market and large enterprises, we weren’t doing that.”
In the end, while the expense management space may remain competitive and see some (perhaps needed) consolidation, stories like this do exist, and accountants should always do their due diligence before committing to new apps or tools.
