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Blake Oliver: [00:00:05] We are at Borgo Egnazia in Puglia, Italy at ExpensiCon David and we have the privilege of speaking with firm owners and Expensify developers and we're just going to spend the next few hours doing that from all over the world. All over the world.

David Leary: [00:00:22] And our the first guest we're going to interview here, they're from South Africa, Blake. South Africa.

Blake Oliver: [00:00:28] South Africa. I think this is the first South African firm that we have ever had on the Cloud Accounting Podcast. So thank you, gentlemen, for joining us. Thanks.

Peter Magner: [00:00:35] Great to be part of the podcast.

Blake Oliver: [00:00:37] Would you mind introducing yourselves?

Peter Magner: [00:00:39] Yeah, sure. My name is Peter Magner and to the right of me is my brother.

Simon Magner: [00:00:44] So, Simon Magner. And we're the founders and directors of Iridium Business Solution, which is based in Cape Town, South Africa.

Blake Oliver: [00:00:50] Iridium ... Is there a connection to South Africa?

Simon Magner: [00:00:55] So Iridium is actually on the periodic table of elements. I always forget if it's 69 or 60 8 or 67, 69, 69, it's on the Iron.

David Leary: [00:01:02] Man or.

Peter Magner: [00:01:03] Iron Man.

David Leary: [00:01:04] Captain America Shield.

Blake Oliver: [00:01:06] Is at Iridium.

Simon Magner: [00:01:07] Iridium is actually a precious metal, and apparently it's more expensive than platinum. So when they mine it, it costs a few thousand dollars an ounce or a couple of ounces. So we do not have any iridium at our office. It was our intention at some point to buy a piece of metal with our logo. And then when we realized how much that was going to cost us, that idea was shelved very quickly.

Blake Oliver: [00:01:26] What are we talking about? Thousands.

Simon Magner: [00:01:28] It's thousands of dollars and it's well, it's premium.

Blake Oliver: [00:01:31] It's something to aspire to, right?

Peter Magner: [00:01:32] Oh, definitely.

Simon Magner: [00:01:33] And that was not the intention when we came up with the company name. I was just Googling and I thought, let me find a cool name. That does not sound like my surname or my uncle's surname or a family anything, because New Age accountants don't want to be named after their name because then if you leave, then it's kind of your name.

David Leary: [00:01:48] You don't have to be major minor brothers cpas.com or-

Peter Magner: [00:01:51] Yeah, it's kind of boring.

Simon Magner: [00:01:52] That is not cool. So we thought we would come up with something abstract and I googled it. The only thing I could find was Iridium in America was a satellite phone company and I looked around and I could get a pretty good domain that was, you know, working pretty well for us. I just we just went from there and all these great analogies with precious metal and something like that. I took them on after. So that was not my intention when we started.

Blake Oliver: [00:02:13] So if our listeners want to go check out your website, what's the Iridium iridium.co dot z? Z. Z, z, z, z. I always get confused. I'm learning. I'm learning. This is my first time to Europe. My first time to Italy. How about you guys?

Peter Magner: [00:02:29] It's my second time actually, but it was about 18 years ago when I just finished school. I did like the typical thing, you know, finished finish school and do a year after, before I decide what I'm going to do with my life. And it popped across here for for like a week.

Blake Oliver: [00:02:45] So you came to Italy and then you decided, I want to do accounting for the rest of my life.

Peter Magner: [00:02:49] Yeah, it was weighing up between doing accounting and being being a doctor. And what's the other one with lots of maths? I can't even remember. Statistician Yeah, like a statistician actuary. And I kind of heard that actually was a kind of boring and accountants slash business and make money. So that's.

Blake Oliver: [00:03:09] The joke. Actuaries are the only profession that's more boring than accounting, right? Yes.

Peter Magner: [00:03:15] I like people. So I was like, I don't want to be an actuary. Yeah.

Blake Oliver: [00:03:17] No. And so tell us about the services in your firm. You work with people. You don't just crunch the numbers.

Peter Magner: [00:03:24] Yeah, yeah. We work with small business owners, so we, we kind of wanted to move the needle on unemployment because that's a big problem in South Africa. And so small business owners are kind of where you can do that. Big corporates, you can't really change much. And so we decided to focus on small business owners within South Africa rather than like the rest of the world for now, and just chat to them about how to do business better and use tools like Xero and other cloud based technology and implement better ways of doing things.

Blake Oliver: [00:03:56] So we are familiar with the struggles of our Canadian counterparts in terms of technology. It doesn't always work. It doesn't always translate right. The stuff we have here in the US doesn't work up there. For instance, a lot of the payment networks don't work in Canada. Do you have similar issues with technology in South Africa?

Simon Magner: [00:04:14] We are pretty much in a similar page. I mean something like Stripe, which all the technology companies want to use to collect their software fees. It does not work for South African. Well, there's not an alternative to collect from South Africans.

Blake Oliver: [00:04:25] There's no Stripe.

Simon Magner: [00:04:26] There's no Stripe, there's no Bill.com.

Peter Magner: [00:04:29] No Bill.com.

Simon Magner: [00:04:29] If you want to have Stripe in South Africa, you need to open up a bank account in the States and kind of work some elaborate scheme of shifting money between bank accounts. But it doesn't work in our country. So that's one of the challenges. You can't get payouts from there. You can get a payout from PayPal. Okay, that works fine, but you can't get a payout from Stripe into a bank account.

David Leary: [00:04:46] So is this resulting in a whole new ecosystem of apps that are just focused on the South African market? Is there like apps that we don't even know exist or I.

Simon Magner: [00:04:57] Mean, most of the apps in South Africa are country specific business like payroll apps. And local kind of tax kind of related things. I think a lot of the products that work in South Africa, work in the States and work in Canada as well. I mean, we all have the same challenges. We need a base accounting system. Fortunately, accounting is global. So that's kind of a cool thing. I mean, your your ultimate financial statement is you're signing off. We're going to be in accordance with IFRS. But when you're doing debits and credits, that's pretty global, you know, So that doesn't change. And you know, something like Bill.com doesn't work because of the way it's designed. It's designed for the US market. You know, we need OCR software, so we like using Dext in South Africa and that works really well for us. And obviously Hubdoc is now linked up with Xero, which does a similar kind of function. So, so those type of products are the core of everything we do, but we also realized we can't learn everything. We need to kind of be focused on what we're doing. And as much as we want to say we can do anything, we realized if we get good at a few things, we can leverage that and kind of build scale.

David Leary: [00:05:53] And how long have you had your firm?

Simon Magner: [00:05:55] So ten years in June. We're having our birthday party soon.

David Leary: [00:05:59] And you've been a Xero firm that whole time?

Peter Magner: [00:06:01] Yeah, 100% Xero from.

David Leary: [00:06:02] Day one, day one cloud, because I feel like South Africa in the last like four years, like bubbled up on the radar. Like all of a sudden it's the hot cloud place. And but it's obviously longer than that. It's not something as recent. If you guys did ten years ago, you went straight to cloud. How did you know? Just to go straight to cloud?

Simon Magner: [00:06:16] Well, I was actually sitting at home when I'd quit my job at an audit firm saying I need to I realize I was a better person doing things than listening to other people. You know, I'm not a good employee. It's basically the answer. Yeah, same here. I'm a good boss and I'm okay to take the risks. I kind of get excited about the risk and doing things. So I started up and I phoned a few friends and said, How can I help you? I've got a degree. I'm a qualified chartered accountant. What can I do? And a lot of people said, You can do my personal tax returns. I got a bunch of personal tax returns. And then someone phoned me up and they said they needed an independent review done, which is in fact like a mini audit. So the guy said, Come do it. And he was another accountant because he had set up his company structure in a way to leverage tax efficiency. So I think his mother owned the company and that was the way that he got like these additional benefits anyway. You know, I often say we always work in an angle. And on that day when I reviewed his accounts, he was working on Xero and he showed me how to audit his Xero accounts. And I was like, The system looks pretty cool. And he's like, Yeah, yeah. Just chat to this guy. He'll hook you up. And I went online and there was this online Xero course I, I have to pay like $100 to do it or something. And then I was Xero certified and became a partner and I was like, this system looks pretty cool. And I just started signing people up and that was my first couple of customers. So. So you, you.

David Leary: [00:07:36] Backed your way into having a firm you didn't set out? I'm going to start a firm. You kind of fell into the software register.

Peter Magner: [00:07:42] He was unemployed, so he he was unemployed. I thought it would be a I'd use my skills that I learned at Fast.ai and kind of what I knew. And I'd see if I could make some money. I mean, I've always been a businessman. That's always been my idea. I'll make money. When me and Peter were kids, we used to sit at home and go, How do we make money? And we would go and buy chocolate from the, you know, the shops and melt it and put it into little shapes around Easter time and put it in little bags and knock on the neighbor's doors and sell it to them. And obviously I was the slightly older brother. So I would say, Peter, you were like five. I was a good looking brother. No one's going to say no to a five year old kid knocking on your door saying you want a bag of chocolates. And we never made it to the end of the road. Like we literally every time we made we'd make it like three quarters of the way down the road and we'd run out of stock and it'd be like, Let's go back to the shops and buy some more. And it worked pretty well. I'm pretty sure Peter got paid. I don't know if he did get paid, but there was definitely money being made.

David Leary: [00:08:34] Steven Mnuchin Business ventures your whole life together then?

Simon Magner: [00:08:37] Pretty much.

Blake Oliver: [00:08:38] And is that how it works now today? Is it still the same?

Peter Magner: [00:08:40] Pretty much. I mean, now we've realized that I'm much better at sales. So I mean, the early days of me selling chocolate helped me. So we kind of focused in specific areas that we're good at and I love being creative, so I love playing around with technology. I do do our marketing and sales. I am an accountant as well, but I like playing with things and solving problems and Simon deals with the finances and HR and there's a lot of problems in HR, so-

Simon Magner: [00:09:07] I'm very much like a raid personality. So I'll tell you how we're going to solve a problem and I'm going to hold everyone accountable to getting it done. So I like to kind of the buck and stop with me. I'm happy with that. And I'll look at people and say, we need to make this happen. Whereas Peter is like he said, he's more creative, artistic, which means there's not really like always a plan. He's doing stuff, but I don't always know what he is doing and he jokes about it and I'm like, Well, we've got a kind of cool firm. It looks pretty. People are coming to us, so something's working.

David Leary: [00:09:35] And then your team. So you said your clients are all in South Africa. That's your team remote globally or is your team all in South Africa?

Simon Magner: [00:09:41] We've got team members sitting in like four locations. Three three of the groups are in South Africa. So we've got our main offices in Cape Town and we've got probably like 40 people out. And then in Johannesburg, we've got a couple of guys doing CFO services so that outsource like fractional CFO. And we've. There was a separate company. We opened up and then we opened up another one in Pretoria, which is near Johannesburg, and that's another office. They're doing exactly what we're doing in Cape Town. We partnered with another accountant and we set up another office there because we thought it would be good to kind of access other parts of the country. And then we had a couple of people well, one lady that worked with us for a number of years and she said, I'm going to leave South Africa. I'm going to Namibia, which is like pretty much like USA and Canada, you know, over the border. She's like, But I like working with you. Can I just stay? So we had to open up another country so we can put on a payroll. Another company there. So we've got two ladies there and they're going to hire another one soon. So we're a global firm is what I'm actually saying. All right. Sounds like it.

Blake Oliver: [00:10:39] And is that your biggest challenge or is it something else? Well, people just like what is the I guess my question is, what is the biggest challenge you face owning your firm? What's the hardest thing about it?

Peter Magner: [00:10:51] I think it's as as we've grown, we've grown really quickly. So start a COVID We're about 17 people back in 2020 now we're 51 people and each kind of rung of scale. You need to rethink how you do business. You need to rethink how you price, how you engage with your people. And there's not a lot of people in our space that have grown that quickly and that large, so we don't have that many people to go. Like, let's talk to those people about how to do that. So we kind of just winging it most of the time and on the fly going, Well, what's the next problem we need to solve? And trying to figure out in six months time, what's that problem going to look like and how do we come up with a better way of doing it?

Simon Magner: [00:11:39] But to Peter's point, we're actually great at strategizing. Like if me and Peter could just strategize all day, we'd be exceptional. The problem is that both of us really suck at like, executing on the plan, you know, which sounds funny for a bunch of accountants, but like, we will solve any problem in the world. Just don't ask me to do it. So what we've realized is we need to hire people who are not the same as us, who are great at executing. And that's actually where we are right now. We're looking to actively hire people in that middle layer of management who can, who really just want to do what we tell them they need to solve and do. And that frees us up to kind of do other things. And it's exciting. That's why I love running it. We don't run an accounting practice. We run an accounting business and we solve problems. You know, I think me and Peter have always been problem solvers. Like if something doesn't make sense, we're like, let's fix.

Blake Oliver: [00:12:26] Tell me more about the difference between running an accounting practice and running an accounting business.

Simon Magner: [00:12:30] Well, we had to make money. That's my starting point. I want to make a profit and I'm only going to do something if it makes sense from a financial point of view. And I think that's the whole kind of it's the same mirror that I use against my clients. When someone says I'm doing this, I go, Why are you doing that? And how does it make you more profit? And if they go, I don't know, then I'm like, Well, that doesn't make sense because you're not running a charity, you know? And that's why when clients come to us and say, like, I'm not making a profit, like, can you discount my fees? I go, No, like, this is not a charity. You are there to run a business and be successful and make money. I'm here to run a business and be successful and make money. That sounds like a good alignment and a good partnership. And if something doesn't make financial sense, if you if you working for me and you're not generating revenue, you probably should stop working for me. So I think that's a nice way of kind of holding ourselves accountable. A lot of accountants call themselves accounting practitioners. They running a practice, you know, and I joked with Peter the one time and said it feels like they're not doing a real thing. They're like practicing. They're practicing for something. They're practicing for something. One day they'll be real. Yeah, you know, but we are running a business and every time we talk to people, we say we're running a business and we are not a family. We're a high performing team. And on any sports team, if someone's not performing, they get traded and they get cut. Whereas in a family, if your uncle is not a nice uncle, you don't cut your uncle. You invite him back to the next barbecue and the next event, even if no one likes him. So I think that's a nice kind of difference that people often miss.

David Leary: [00:14:02] Yeah, and this is why Peter's still around. You can't family.

Simon Magner: [00:14:04] Pretty much get rid of Peter.

Peter Magner: [00:14:06] And as you said, you got to hire people that are different and better in certain. So that's why.

Blake Oliver: [00:14:13] Yeah, there you go. So let's talk about Expensify. Since we're here at ExpensiCon Con, how long have you been using Expensify at Iridium?

Peter Magner: [00:14:20] Sure. Probably like more than six years. We actually started using it because we had this large tech client that and we said we like solving problems. So they came to us and they had 150 people and we started walking through their business and looking at their tech stack, and it was very broken, nothing connected to anything they had like Jira, Jira for approvals. And we mapped out kind of what their problems were. And then I started Googling what could solve those problems. And expense management was one of the challenges they had. So I just went, you know, what are the cool. Management tools out there found Expensify and started playing around with it. And I was like, I think I can solve your problem through Expensify. And that was one of our first clients and I think that's why we probably got to expense account too, because we rocket shipped with a massive client, and ever since then we've just kept doing that, kept looking at the challenges that our clients have and playing Lego and plugging in stuff.

David Leary: [00:15:25] So what's your favorite Expensify feature?

Peter Magner: [00:15:28] So in South Africa we don't have all the cool things like Expensify card. If we did, I would love to have that. But I think it's just the simplicity of being able to just snap a picture. It automatically starts picking things up and it builds a report. For me, like it's the basics of what it does that I think made us fall in love with it was that it just it's simple.

Simon Magner: [00:15:52] I like the auto submit. I mean, I'm the financial and the HR guy, so I've got to pay the bills at the end of the month. Peaches goes out there and spends money on marketing. And so while I'm paying all the bills, I love the fact that it just closes with guys in my team are so lazy to actually like submit. And then like three weeks later they're like, Hey, did you pay me? I'm like, You never submitted. So I like the fact that I just have a hard close and like the 30th of every month or 31st, it just it just goes. And if it's in policy, it automatically approves. It hits my accounting system and I go, Hey, I owe someone money. So that just makes my life easier. I mean, that's not what we want.

Blake Oliver: [00:16:25] Yeah. Anything in particular you're excited about from the sessions here?

Peter Magner: [00:16:29] Yeah, I think it's it's kind of it's both exciting and scary because it's a completely different way of, of, of doing payments and expenses. I think for me it kind of opens up opportunities to just do things differently. And when they started unpacking it, I was like, okay, well, I was a little scared that there was no structure to it. And then they started unveiling some of the layers of structure. And I think it's it's it's going to allow people to just interact a lot faster and and allow you to get to the nitty gritty of like, why was this here like a little like slip rather than having it sit in the background, ou can just nail down the answer and and move on. So I think it's a it's a really interesting concept and I'm looking forward to seeing how it kind of builds out.

Blake Oliver: [00:17:21] You want to wrap up, David.

David Leary: [00:17:22] Just one last thing would be what do you love about ExpensiCon con?

Blake Oliver: [00:17:27] What's there not to love, right?

Simon Magner: [00:17:28] It's got to be the network. So yeah, I mean, I don't think I've come to any day in the last few days where I haven't sat down at a table with someone new and he goes, Hey, my name is, you know, and five minutes later the guy is like, Wow, that's really cool. And he said something really interesting. And I know at the last expense, he came to be connected with 1015 people. We connected on LinkedIn, shared a few thoughts, and, you know, four years later we walk into the, you know, the next expense card and guys are like high fiving, you know, I know. How are you doing? How's things going? You know, and, and I think it's real and it's nice to talk to people who are dealing with the same challenges you are and you get to share things. You know, we've made a couple, had a couple of chats and guys like we definitely talking next week. There's something we can work together on, which is really cool and you don't get that anywhere else. So that's, that's really powerful.

Peter Magner: [00:18:14] Yeah, I think it's like people are just real. You can, you can chat to anyone and people aren't, they're not. They're kind of humbled. They're like, this is just who I am. They're not coming in here going, I'm the best at everything. You can just have a casual conversation with people and then you realize actually they're kind of a big deal. But you just had a, you know, a drink with them. And and so I think it's that, you know, that human authentic nature of the the whole event.

Blake Oliver: [00:18:43] Well, thanks, guys. Thanks for joining us and chatting with us. And hope to. We'll see you later tonight.

Peter Magner: [00:18:48] Yeah. Thanks, guys. Thanks a lot, guys.

David Leary: [00:18:49] Thanks, guys.