Hot dog stands, energy drink distribution, custom ping-pong balls—Enrico Palmerino has run about every kind of business you can imagine.
His ventures attracted him to data analysis, which eventually led him to found his current tech startup, Botkeeper, an automatic bookkeeping solution for accounting firms, powered by AI and machine learning.
On this edition of Founders Journey, Enrico tells us about his early beginnings and how he ended up creating a lighting company in college that pulled in over $8 million in revenue by his senior year.
More information: https://www.botkeeper.com/
Botkeeper has raised $50M from marque investors and serves several thousand companies and 80+ accounting firms, processing 30M+ transactions per quarter. Enrico also serves on the Board of OnProcess Technology and Fidelity Bank and is an investor and advisor in several prominent tech companies. He has been recognized as one of the Top 100 Most Influential People in Accounting, Top 30 Most Inspiring Business Leaders, and 2020 Golden Bridge Entrepreneur of the Year.show more
Prior to Botkeeper, Enrico was co-owner and Managing Director of SmartBooks, a cloud accounting firm, which grew from 6-40 employees in 3 years before he was bought out in 2015 so he could launch Botkeeper.Early in Enrico’s career he was ranked 2nd among Bloomberg’s Top 25 Entrepreneurs Under 25 in recognition of his co-founding ThinkLite. Enrico grew ThinkLite from dorm room start-up to $8.5M ARR before graduating college and successfully exiting the venture.show less
DISCLAIMER: Below is an AI generated transcript. There could be a few typos but it should be at least 90% accurate. Watch video or listen to the podcast for the full experience!
Enrico Palmerino 0:00
You have to be able to relate. I see founders all too often built great tech that I’m passionate about the thing that they built, but they can’t convey to the other individual the results like
Alexander Ferguson 0:15
Welcome to UpTech Report. This is our founders journey series UpTech Report is sponsored by TeraLeap. Learn how to leverage the power of video at Teraleap.io. I’m excited to be joined by my guest again, Enrico Palmerino who’s based in Boston. He’s the CEO and Co Founder at Botkeeper. Go back and listen to part one of our discussion where we dove into the the product itself how it is automated bookkeeping, supporting CPA firms, accounting firms in doing what they do using a combination of machine learning AI and skilled accountants themselves. But good to have you again, Enrico, I want to hear more about your journey. This isn’t your first venture you actually mentioned the last end of our first interview 13 different ventures two or three of them now being able to succeed. Take me back, like all the way to the beginning. What was that? What was the first product? Like? Have you just always been an entrepreneur?
Enrico Palmerino 1:06
I think so I think I was maybe you could say I was I’ve always been rebellious is probably a better way to put it. But yeah, I mean, as a kid, I was the kid who was like selling candy at soccer games and had like a hotdog stand and then started buying vending machines and putting them in supermarkets and stores and then had a landscaping company. And then you know, a number of other drinks, I was doing energy drinks, like an energy drink distribution, I got into liquor distribution, I got like, just a number I had a Yeah, a number of small businesses, custom ping pong balls, like, you name it. And then in college, one of those businesses was called pink light. It was like my end of freshman year, sophomore year, we started a business that basically automated lighting analysis and design for we could 3d render very, very large properties in short order, and allow you to customize with like a few clicks, how you wanted to how you wanted to optimize the lighting level, and where to put luminaires or lights within a building. And then what technology would get you the best result. So is like led induction, you know, fluorescent etc. And that ultimately, and doing all this analysis, we got a lot of data, and then we use the data to patent and manufacture some of our own products and niche markets. And the long and short of it was you know, by senior year it was doing about eight and a half million in revenue and then went on to have a nice exit and yeah, that that let me start chasing, chasing other passions with without having to beg others for capital or you know, call it mortgage my life with that and, and loans so
Alexander Ferguson 2:47
that that is the place to be but hold on, hold on, I want to go back for a moment cuz you were you’re referencing all these businesses you started with, you know, the vending machines and and and liquor things and that and but then you get the software like what did that just happen naturally? Like what what was the switch to it at kind of a software company of analysis and analyzing all these things from from these other businesses.
Enrico Palmerino 3:10
So, like, I grew up in central Massachusetts as like the stacks, and I think like you just as a kid, just very easy to conceptualize products, right in hardware. And in school, when I got into college, I’d done some computer programming and enjoyed it. But in high school, like we just didn’t have like a colleague who didn’t have great courses there. And I had other businesses, so I wasn’t like on the computer trying to like learn how to program. But in, in college I was doing basically using like an Access database to automate, we had a class project was go find something and automate that something. And I happen to see a guy walking around campus, analyzing lighting and flipping through a catalog and taking notes down on graphing paper and enjoying cell phones like that just seems like the catalogs a database like a database. And this analysis that he’s doing, like I don’t know what he’s doing, but I’ll figure it out. I bet I could use being a math major, a number of algorithms to compute it in an automated fashion. Look, there you go. That was the the founding, you know, descending.
Alexander Ferguson 4:22
So you see, you see the idea for your actual first main company while you’re in college as a college product project that turns into the company itself.
Enrico Palmerino 4:32
Yep. You make that business. I gotta hand it to Babson. They’re a great school and gave me afforded me a lot of flexibility because running a business like that or trying to attend school would be very, very difficult. And so as a business grew and got popularity as a great trade off, like the more successful it was the more attention Babson got absolutely allowed me to have like some of my class projects where I was thinking about opening an office in Turkey. So Here’s five students that will put the business plan together for you to do that. And so it was great. I got to do a lot of things in school that you know helped benefit my business. That’s that is
Alexander Ferguson 5:14
probably not easy to replicate but a nice position to be and the symbiotic relationship. Now for that you you found it yourself.
Enrico Palmerino 5:22
You were the only owner of my co founder was Dinesh Advani. So it was kind of college dorm mates. They were just Workaholics. And that’s how we found each other. Everyone told us like you guys never sleep. You’re always working on these other ventures you should meet. And the first day we met, I was like, I’ve got this idea. He’s like, that’s awesome. We pulled an all nighter, like working working on it. And yeah, the rest is history, the rest and it still it still runs like he’s a, he and his brother have actually since taken over, and continuing to run a company today. So Wow, that’s cool. It’s cool to see the trucks drive by from time to time, or they just did a big project lighting up the Prudential Center in Boston, which is pretty big building.
Alexander Ferguson 6:05
Not many founders who start something can say that, that it just continues to live on without them. Long veal, and so
Enrico Palmerino 6:12
you got good people and good systems in place. You know, that’s the ultimate goal.
Alexander Ferguson 6:15
Now, rather than from there. Tell me what was the journey then after that? Because that was you that was you exited? 2013? I think that’s correct.
Enrico Palmerino 6:25
2011 or 12?
Alexander Ferguson 6:27
Gotcha. Okay, so catch up 40 board directors I see right there. But then that’s still many years until bookkeeper. So what was the journey in between?
Enrico Palmerino 6:37
So the biggest headache we had was just our finance and accounting, keeping up and try to find one, don’t I play an account on TV, but I’m not one in person. So finding hiring, like and getting the right skill sets, and then even then you’re still limited by, you know, eight hours a day. And to be able to get things done in our business with that level of growth just had a lot of complicated. I always just wanted reports faster, I wanted greater analysis or detail. And I find I get a report right before it’s going to a bank get alone. Like she there’s numbers. And this is like wrong, where’s the error and I. So basically, I saw the opportunity to be like, Well, let me get into Cloud accounting. And so I joined a husband and wife, and in their practice that started a small bookkeeping operation, teamed up with them and invested money and then grew a cloud accounting practice. And to solve that problem for SMBs. And then ran into, you know, the glass ceiling, like we were turning, we had to turn away business. And we had clients who were booking on boardings out like three months plus in advance, just because you could only do do certain aspects with people so fast, and the finding the hiring and the budgeting of the supply and like will the demand be there and managing utilization rates of staff is really hard. And so gather, that’s where the concept for boxing was born, unify the app stack, make it simpler and easier for the accountant to manage their clients and get the work done. And then use that app stack as a data exchange to get data from the SMB automate a lot of the processing with machine learning, and then relay back the result in an analyze format to the dsmb and the accountant to then be able to offer additional advice.
Alexander Ferguson 8:28
So you invest your money, you’re like I have to do something and I had I was annoyed by accounting so you start you just joined forces and other folks and this is smart books courses a smart okay to to build this company. And then you start to realize, wow, scaling, we can only get to a certain point, there’s issues with the stack itself, which then leads to the the inception and concept of bookkeeper.
Enrico Palmerino 8:52
Yeah, I mean, I attended a number of conferences like these accounting conferences and everyone’s biggest problem, like, top two problems, were finding talent and retaining talent. And it just it was I feel like if it was say said three times, at one conference, it said five times the next 110 times, you know, the following year, and you could just see it was this growing problem and I looked started looking at this statistics behind it and accountancy, you know, accountants going out into accountancy it was down 20% year over year. Yeah, and 72% of accountants that leave an accounting job leave the industry altogether, so they’re not even the pool is is diminishing, and a lot of baby boomers are accountants and they’re retiring. So yeah, you saw
Alexander Ferguson 9:36
the issue on a macro scale overall that this was this was gonna be an issue so that leads to you to bookkeeper. Now, any three well wasn’t the first one. We’re actually all I just asked point blank any three of these ventures Did you raise funds, I was always self funded.
Enrico Palmerino 9:51
Smart books was totally self funded. Other than, you know, contributions of owners. The think like, you could say we raised We actually went out and tried to do like an angel round and like, a little concept like, get, it just seems like it’d be really complicated, but like it is, and that’s why that’s why we can do it. It’s just gonna be a big business. So we we raise capital in the form of like loans, like, lots of credit card debt, and all the things that I’d say, like you really shouldn’t do. And I was like, personally liable for like, a million dollars in debt, and that could totally ruin your life, and we’re liable
Alexander Ferguson 10:28
for a million dollars of debt. Yeah.
Enrico Palmerino 10:31
Personally, on top of school loans, college loans, right. So like, that could mess up someone’s life for like, a long time. And you believed that much in it? Yeah. And we just, you know, we knew it got to a point where like, we then I think, doubled that personal liability, because we were just like, well, I’m kind of already screwed if this doesn’t work out. So that’s $2 million in personal but it worked. And you know, we we got where we want to go with a lot of hard work and a lot of great people.
Alexander Ferguson 11:01
You made a mentioned earlier, once you exited there like then then you didn’t have to worry about debt anymore. Now right now makes connection you had it and you’re like now I don’t have to worry about that. That debt any any more now for for Bucky Fuller? Did you raise funds for this? Or did you also just self invest or self invested
Enrico Palmerino 11:17
in the beginning? And a lot of people are like, how did you build that? Like, how did you bootstrap Botkeeper and build that and I’m like, it’s not fair. Really. Like I know, people who shop we bootstrap in luxury boots, I put about a million of my own capital into it, which is like you can call that a VC level, you know, investment to get it off the ground. And then we went on to raise like, since then we did a four and a half million seed. We did a an $18 million a round, then most read last year, we did $25 million B round. So we’ve raised about 47 and a half million to date. So building what we built is not cheap,
Alexander Ferguson 11:52
not easy. When it comes to that much development of the the the stack and the engine behind it. Obviously you can’t cheap out on both the developers and the folks to build it. And you’re right. I think he said in the last interview about three, three costing 300, folks. Yeah.
Enrico Palmerino 12:06
And we’re still hiring. So check out our job postings.
Alexander Ferguson 12:10
I love that. So not not a small team, but a big vision of where you’re headed. Can you share any advice on this raising funds and being able to get that for other founders.
Enrico Palmerino 12:22
So I think like it starts with the story, you’re going to tell. So you have to be able to relate. I see founders all too often built great tech that I passionate about the thing that they built, but they can’t convey to the other individual the results like why is this great? What’s the value it’s providing to the market other than the underlying tech. So first, work on simplifying how you’re explaining what you’re doing with, with backup and supporting details to like the how and why. But leave that second, like, if someone can understand the concept and likes, believes that this is solving a problem, people would pay money for it, then you can show them the technical how and why. And then to you gotta if you’re going to go out and raise, you have to do it, it has to be like a full time job. And you have to do it methodically, like you can’t casually raise money. Because if you’re casually raising, you know, there’s no incentive for anyone to pull the trigger now versus just kind of wait around and see what other people are doing. And, you know, see how things play out. So you got a follow up process. Actually, I did a whole video out there called how I raised it, like Google my name, how I raised it. There’s like a 45 minute talk I give about the process and the methodology to doing it.
Alexander Ferguson 13:37
One thing is funding the next thing is actually building the team to make it happen. Now at close to 300 folks are at threat threat, folks, what can you share of actually going out of the very beginning? What was your first hire, crucial hire that you made.
Enrico Palmerino 13:51
So I looked at the people I knew, like my relationship with my network and said, I’ve built in this thing, great advice for entrepreneurs out there. If you’re a founding a company, you can’t do it by yourself, you need a team. Because while you’re building tech, you’re not selling marketing or operating while you’re selling, you’re not doing any of the other and so on and so forth. So find a team of like four people that can own those different chunks, each don’t overlap each other. And that’s how you’re going to move faster. So I looked at my network, I was like, No, this guy Louie who sold to SMBs. Like understand that he understands finance, he’s well net like everyone loves him. It’d be great running sales. I my sister and I done she was at smart books with me. And we’ve done other ventures together and it’s like she’s awesome when it comes to marketing and she loves building like she started like she kind of taught herself how to program because she can help me out in those two areas. Then I have another friend of mine was a CPA, so he can make sure that like from a technology standpoint, from an operating standpoint, the result is accurate and where we need it to be and then Justin Bosh joined. And here’s a guy who I got, I met at an event, who’s just like, had a plethora of information and know how and could hack, like, he’s like you not gonna, if someone told him, No, it can’t be done, he’s going to prove to you that it could. And so you know, with that team, we got it off the ground. And, yeah, and then continue to just hire great people, that’s the key to success hire people way smarter than you at everything in the business and can’t go wrong.
Alexander Ferguson 15:33
One piece is, is the funding to money to get started, the next piece is to have a good team, but then you do need clients and customers working particularly in the SMB space, it does come to quantity in many ways to in order to scale, what are some tactics that you have found have worked really well in order to grow and market and get attention.
Enrico Palmerino 15:57
So one, you want your all your clients to be raving because if they’re coming in the door, and then going out the back door, you’re going to be it’s a uphill battle that you’re probably going to lose. And the more raving that they are, the more referrals that you’re going to get. And if you can find means of like distribution, so we got heavily involved with associations and you know, well networked into different groups where people they’re like, Oh, you need bookkeeping whose bookkeeper? Or and other people in those groups without Who do you use, I use blocky brain. So you start to build critical masses in small pockets of you being like the de facto choice. And, and so that works out really well. And then ideally, if you can find a channel to, to especially if you’re gonna be selling to SMBs, that can help you get a lot of SMBs for low cost, because managing the LTV to CAC ratio is pretty difficult and selling to us and B’s. And for us, that’s, we have a many to many. So we have relationships with partners that help us sell us into accounting firms, those accounting firms have many, and there’s many accounting firms, and those accounting firms have many clients. And so that’s kind of the ideal, many to many, how long did it take you to develop each of
Alexander Ferguson 17:06
those different verticals and in channel channel partners,
Enrico Palmerino 17:10
a long time and a continued process. So because it takes it takes credibility, you have to you have to establish, and that’s why if you start with like a pocket, you can start establishing some level of credit, credibility and critical mass. And then that can be used as like it works and look at all these people that love it. And when you’re building the partnership, the first thing you should ask yourself is how do I bring value to them? Like, that’s all I care about anytime we enter into a partnership is how do I generate as much value for you. And if I do that successfully, we can talk about generating value for me, because more often than not, who you want to partner with is more established than you are. So you just got to put your best foot forward to help them first. And if you do that, well they’re going to inevitably help you.
Alexander Ferguson 17:53
That’s powerful for you as a as a leader. What’s your typical day look like?
Enrico Palmerino 18:01
A lot of meetings. But uh, but I organized so I try to block out like two days a week where it’s just like, I get to just think about the business and what we’re doing and work on a few big projects, or a few goals I’ve set for the quarter. It’s, you know, I block out a day, I only manage the team one day a week. So when I say like, I’m not managing the team, I’m say providing I’m a sounding board or providing advice or guidance on things one day a week. So I have a stack day from eight to 630 or so and meetings back to back to back with different department heads and teams and and then the way that lets me do is it’s just, I can be one track focused for that day on that sort of thing. It’s grueling. I’m exhausted by the end. But then the other days, you know, I’ll have days where I’m got meetings in which like sales focused, but it’s, it’s it’s different. It’s like I’m more working on the thing then call it like having a traditional meeting.
Alexander Ferguson 18:59
What did it look? When did it transition to that? What did it look like at the beginning when you were founder? how did how would you organize your days then? Or is it always been that way?
Enrico Palmerino 19:08
So I always carved out. I basically it was like night in the beginning when you’re a founder and you don’t have a big enough team you got to be doing more and more of the you got to be thinking and doing all the time. And so what I tried to do is carve out like a day or two if I was lucky, but like a day of just thinking and working on big problems. And nights were dedicated to big problems. And weekends were dedicated to Paul. So I’d basically say like, Saturday was work on the business. And during the week I’d be working in it except for nighttime. I wouldn’t touch email and just be I was this next thing that we need to solve and how do we get there?
Alexander Ferguson 19:49
For you also as a leader, where have you gotten good insights, any books, podcasts, audio books that you can recommend?
Enrico Palmerino 19:56
Yeah, and there’s a ton of great books out there. One that I think puts a, you know, for a lot of entrepreneurs, you’re a little, I think we’re all a little chaotic, and we get excited and passionate about things. And this idea of structure is a little, not our natural tendency or inclination. So a great book I’d recommend is traction, it’s kind of teach you the entrepreneur operating system, it’s a good framework for just adding a structure to the business, which every business needs. So I highly recommend that. And then I’ve been reading a book about basically like living in the age of AI, which is pretty cool to see what the possibilities of that are.
Alexander Ferguson 20:38
If you go back to yourself, when you started this beginning of this venture, even the previous century, and you could tell yourself one thing, what would you What would you say to yourself,
Enrico Palmerino 20:51
I probably just say,
Unknown Speaker 20:55
Enrico Palmerino 20:58
hire hire up, I think is probably like a, you know, punch a weight class above where you think you need to be. So, you know, whatever we did initially, I think was, you know, we hire people that would solve the problem and the need that we had today based and like, they would have the skill and the background to support that. But what I found is like, when I started to be able to hire people that were like, they, they’ve seen that and then they saw like two or three levels beyond that, those people it was awesome, because they would come in and they would be pulling bookkeeper up to a level that they were used to operating at, versus, you know, solving the problem today. And then bookkeeper kind of pulling them up. So if you can find people that are Yeah, a weight class or to above, you know, this current stage you’re in and convince them to join, then it does make a huge difference.
Alexander Ferguson 21:52
as powerful to they have
Enrico Palmerino 21:53
the learnings right there, they’ve already made the mistakes, and they made them at the next level that you’re hopefully going to achieve.
Alexander Ferguson 21:58
Yeah, that is that is powerful. To kind of close this out. Any tech predictions that you want to make? In that for the near term? What do you see coming up, but in the next year or two? Or a bit longer? 510 years from now?
Enrico Palmerino 22:11
Yeah, so from a technology standpoint, I think you’re in an ideal world, I think accounting is going to become this is going to effectively run on blockchain. Just because there’ll be this call it world. Global ledger. And, and I just think this is a global distributed ledger. Because ultimately, if if enough businesses start kind of operating on one platform, and the platform is structured the right way to, to store map, you know, learn off of the data, tag it accordingly. The idea that like one client credit is another clients debit should like it shouldn’t be this idea that like you run in a silo, and you buy and sell and expense things and, and you’re selling to this other company, but they’re they’re having to do the accounting totally separate, they should just be interconnected. I think, you know, in 10 years, you probably have this globally distributed ledger that is widely used by by the world. And yeah, the transactions are not siloed anymore. They’re related.
Alexander Ferguson 23:18
That is a fascinating concept that would simplify a lot of things. But I wonder how transparency plays a role, then does everyone know what everything is happening? And how does that affect?
Enrico Palmerino 23:31
you’d only know you’d only know what’s on your books, because it’s, you know, encrypted, right. So the other party would see the other side of the transaction. And in the ideal world, this would also be really great for governments too, because you’d eliminate this, you know, call it tax loops or tax holes. And here I have a business owner saying, I guess it’d be better if tax structure was totally simplified, and there wasn’t a lot of times but you know, trying to game the system like that those resources can be used to, you know, better, the better the world.
Alexander Ferguson 24:00
So let’s assume we’re all in this on this blockchain, what’s the role of a CPA or an accounting firm?
Enrico Palmerino 24:05
The advice, like, it’s one thing to get the data in there accurately. It’s another thing to actually make sense of it. So to be able to, like look at it and understand the trends and what does this mean for your business? Most entrepreneurs are innovators, they’re passionate about the thing that they’re doing. They’re not an accountant. And so you need accountants that can tell them, you know, while making this huge investment in machinery seems great right now. Is it going to cripple your company and the ability for you to you know, hire even the salespeople that you need to get the unit’s volume you need to grow into this machine you want to buy so yeah, the the account always have a role. And hopefully more accounts go into the space because I think it’s needed.
Alexander Ferguson 24:46
Well, thank you so much for sharing your future predictions, this insight that you’ve had from growing multiple businesses and the journey that you’ve been on. Thank you so much for your time, Enrico.
Enrico Palmerino 24:56
Thank you, Alexander. Appreciate it.
Alexander Ferguson 24:58
Now definitely go back to listen to our first episode to understand more about botkeeper and the cool things that they’re doing and you can also go over to botkeeper.com. We’ll see you guys on the next episode of UpTech Report. That concludes the audio version of this episode. To see the original and more, visit our UpTech Report YouTube channel. If you know a tech company, we should interview you can nominate them at Uptechreport.com. Or if you just prefer to listen, make sure you subscribe to this series on Apple podcasts, Spotify or your favorite podcasting app.