Eliminating Expenses that Eat Your Bottom Line with Omer Menashe, Clyr.io

Hey everybody, it is Jim Johnson, your host here with Contractor Radio and the head coach at Contractor Coach Pro, where we help contractors get control of their business by becoming better leaders so they can grow their business and scale it to that thing that they had envisioned when they started so that they can achieve some personal and financial freedom in the end. That's what we do. We do it every day. We've helped hundreds of contractors. If you want help with something like that, feel free to go with our website and Contractor Coach Pro. Com. Click on the assessment button, take our assessment. It takes about 15 minutes to get that done, but if you'll do it, we'll do a free coaching call with you. Not a sales pitch, an actual coaching call where we'll give you two or three things that you should be working on right now to grow and scale your business and achieve even more as you continue to grow. Today I'm super excited. I have a guest on and I'm a bit of a tech nerd if you guys haven't figured that part out yet. I love that kind of stuff. I like talking about AI, I like talking about efficiency and effectiveness, processes, automation, those type of things. And I feel like we've got an expert on here today. This guy has been involved with multiple startups, several startups, a lot of those that he's been involved with have been acquired for hundreds of millions of dollars. Check out on this finances stuff. He is the founder of Boats and if your skill isn't there, you're going to be unlikely to succeed as a growth type contractor. The other reason is financial acumen. Not having a good grip on your finances and knowing your numbers and making sure that you're profitable at all times, understanding your cash flow, your profit and loss, your balance sheet, all of those things are super important. This is the time to bear down and, and go learn the thing that may not be of the most interest for you, but we're gonna make it a million times easier for you. And so I'm excited to bring on Omir. He is the founder of Clear IO and several other fun things we might talk about today. Omir, good to have you on board.

Jim, thank you for having me. This is so exciting.

Yeah, it's like we started talking. I went, hey, I know all those people you work with and you knew who I had worked with in the past. So we're gonna have a lot in common here to talk about today. I was asking you a little bit about your business and things like that. Can you let the listeners in on A little bit of your background and how you got to here and working with home service contractors.

Yeah, 100% well, started when I was seven. I've always been a nerd, basically got into the technical side of things. I'm Israeli originally so my house was one of the first houses in the country that have the Internet in around 87 80. Yeah, around that time.

It's been a minute because that's the year I graduated high school.

So yeah, working on it. Working on it. Give me a couple years. I have always been fascinated by technology, by automation, by marketing as well and I founded a couple of businesses, sold one, exited the other. Have been involved in the marketing side with quite a few startups that did pretty well in spite of me being involved with them. Kidding. They owe it all to me. And at the end of the day I landed with clear. And not your typical founder journey to find themselves in the contractor space because I mean I always tell the story of how I used to live with my ex girlfriend and I tried to hang a mirror and made a huge hole in the wall of the apartment right behind ours. So that was my experience of being a contractor. But no, it's just that I found it to be a world where there was a ton of super professional people that are so, so passionate about what they do and there is this huge technological gap where if you just show them they're all intelligent people, right, they're just wired differently to do a very different type of work. If you show them how technology can enhance and automate and optimize their workflows, they can 10x themselves really, really easily. And I mean if I wasn't technical it would sound like landing on the moon. I know it's not. I know it's as easy as a, you know, I'm not going to say it's a three step process. It's definitely not as complicated as some people make it out to be and it's right there, it's a low hanging fruit, just right for the bit.

I couldn't agree more. Being process oriented in what you do, making that thing repeatable so it becomes a well oiled Mach is what allows you to actually scale, that's the thing that allows you to scale. And applying technology in a lot of Those areas can 10x20x100x Some of these businesses pretty fast. So why the fintech? So for those of you that don't know that's financial technology, why was that the gap that you saw?

So I mean fintech is definitely the umbrella term I would say it's more on the, it's both fintech but also workflows, right? So let's use the big pain point that Clear solves, right? A contractor or one of their team of field techs goes to a Home Depot, they buy something for $100. Now there's a receipt that came into existence, right? That receipt, from that point, there's six to 10 touch points in the business until that transaction is matched and reconciled and the books are closed, right? The receipt has to exist. The guy has to give it to the office person before they even get there. It's stuffed in their glove compartment or something similar. Somebody has to remind somebody else to bring that receipt in. And once it's in, somebody has to find out, hey Bob, where's that receipt? Which job is that from? It's from three weeks ago, Bob.

Numbers are important.

So nobody knows. Like I said, six to ten touch points. Two to four different people in the organization have to deal with that specific silly receipt for, you know, could be 20 bucks, doesn't have to be a hundred bucks. And that's on, you know, a good day. That's when Bob didn't accidentally use the company card and not his personal card for a personal purchase. This can take 50 to 100 hours sometimes for a business, not to mention lost revenue for that business that they just aren't even aware of. So that's the gap we saw.

So I have a question. It seems to me like there's some other pieces of software that do something similar. For example, like we use smart receipts. I've used Expensify in the past. What makes Clear different from those two? Like so contractor specific.

Well, what makes a difference is that it is contractor specific. That's how we built it. We built it with the right client, owner, project, job hierarchy, that's one thing. So everything in Clear ties into a project or a job essentially at the end of the day, right out of the box. We also made it integrate into the platforms that contractors use today. Jobber Service, Titan Service, Fusion, housecall Pro, a bunch of others across multiple sub industries were there. And we do a two way sync. So we'll pull all of your team members and all of your jobs as they come in into Clear so you can code it to that job. And when that job is done, it's not going to be unclear either. So your texts have a completely seamless and simple process to follow for them to code that receipt in real time. That is one thing. The other issue with the expensifies of the world is that they work on an expense report basis. And that's just. It's an old timey object that has no room in 2023, nobody is going to sit down with a piece of paper and a pen or the digital version of that at the end of the day and start filling in. Yeah, I had these five transactions, these are five expenses. Please approve them. It's just not how these businesses work today, so we've skipped all of that. Everything is on a per transaction basis, all in real time. And that's the big difference between us and the other platforms. They're great platforms, they just don't fit contractors as well.

So I'm the guy, I'm out in the field. We're short a bundle of shingles or a piece of pipe for plumbing or whatever it may be, right? And I run to Home Depot, I get this receipt. What does it look like from there? Do I take a picture of it, put a PO number with it, does it auto read it? Or do I got to put in some numbers? What does that look like?

All great questions. So we tried to make this as simple as possible and we actually used to have a mobile app for people to download and use. We got so much pushback from the industry for that. Right. Nobody wants to use another app, but everybody knows how to text, so that's all you have to do. You snap a photo, you text it to a number that we give you. We will text back a link to a short form. That form is going to ask you which job is it for, what category is it? And if you want to add a note, we will already automatically filter out the merchant the day, the amount we have all of that automatically, nobody has to do anything. And then once you submit that, our AI goes through everything the team has submitted and matches it to the correct transaction so everything is completely matched and reconciled in real time.

Wow, that's pretty slick. It's funny. I don't want another app. You're right. I'm a text message person. I tend to tell people, even in communicating with me, like, hey, if it's something you need, text me and I'll get back to you right away. If it's a longer thing, email it to me. If it's several questions. If it's like highly, like you need me to talk to you, leave a voicemail because I'm probably on the line with somebody while you're calling, but I will get back to you. But I prefer text. Like it's just easy and fast. For me to do. Whose idea was that? Like, instead of an app to do it by text, was it just user based? Like they've gave you so much pushback that you had to do something different?

I wish we could have claimed credit for the idea, but it really was the user base, they were like, we don't want an app. Why can't we just text it? And we started answering, well, you can't text it because. Oh wait, why can't you text it? Then we built it and now they can text it. They can also email it if they're in the office or something. But these are the two ways to send us receipts.

So I take a picture and I text just the picture, or do I need to put any other anything with it? Just the picture itself to this number.

Just the picture.

Wow. Okay, that's pretty cool. I'm excited. That's super easy. Number one, your software then reads it and says, okay, this goes to this sends a form back and has me put the job name or PO number or whatever with it. And that's about it.

Exactly. And because we're integrated with the jobbers of the world, we know exactly which jobs you are as a, as a field tech are assigned to currently. So you only see your jobs. You have the three to five jobs you have open and there's no way to mess it up. It's super simple, super quick. And when you're done with all of.

That, you're giving those field techs a lot of credit. No way to mess it up. We'll find a way, man. That's who we are. No, that's pretty cool. That is pretty awesome. So it sounds like it solves a lot of like getting the information back and forth, but is there like a list of things that you said, hey, there's a gap in this financial part of what people do that if we could nail these three to five things that would make them really happy, is there, is there anything like that that you base your strategy off of?

Yeah. So happy is a big word. You know, some, some people would never be happy. Right? But that's not the thing. The thing is how do we help them grow their business? And that was always our North Star. So right now they're spending these, you know, 50, 100 hours sometimes on chasing receipts and everything. And I can tell them, listen, this pays for itself because we save you so much time. And that's all nice. And I'm sure we'd get a bunch of users that way as well. But where we really help These people grow is by making job costing available to them. Now everybody talks about job costing. I know on this podcast you guys have spoken about that. It's super important, right? How can you grow the business if you're actually losing money on every job?

But it's a bad idea.

Usually bad idea doesn't work. But talking about it and doing it are two separate things. And when you're, you know, a plumber or a locksmith or a garage door installation person and you have 10 jobs a day, how can you even realistically do that and actually get it done in real time? You can't. And then your job costing process, if it even happens, happens in the rear view mirror a month and a half later and it's too late. Now with clear, that's done in real time, in the moment, once the job is done, you know exactly how much you made, how much it cost you to make, the amount you made, and it gets pushed into your erp, CRM, whatever it is you're using to be balanced against the revenue.

So it was always a challenge, right? Like you can do forecasting all you want. The bigger the project and the more things involved. Trades, like if you do multiple stuff like your remodeler or something, something like that, you better have a budget, you better know your cost, you better estimate it, right. You better sign the contract, right. Make sure profitability is there. But as time runs on, there's like this little add on, that little add on person doesn't do a change order. And all of a sudden that job that was coming in at 25, 35% profit is now 5 or 10% profit. Do you guys address any of that with your software?

Yes. So we definitely show budgeting and you can see how you track towards the overall budget inside clear. And that's definitely a feature a lot of our users use. I mean, Jim, you've been doing this for way longer than I have. You're the expert, I'm sure you know that. Just like you said, I don't want to say most, but a lot of these projects go over budget continuously. Like this is how this business is run. It's not that. Yeah, once in a while we get some leakage. No, leakage is the regular state of affairs fares. And if on a project you actually nail the budget, that's, you know, people pop champagnes then. So this is exactly how. And we've heard that actually from a lot of our users that this is the first time they actually know what the budget tracking is as they're Going through the project and not after closing.

That's amazing. So let me see if I understand things right. So I'm in my software, my CRM, whatever it is. I'm putting my estimate together. It's showing me my cost from my database, right? So I have a database backing that up. So I see my profitability of the forecast. Like, that's my budget, saying, hey, this is where it should be. And then you guys get in the middle in real time. You're tracking along, going, comparing to that budget the whole time. Like, hey, is that right? Not right. And then even before I get to the end of the project, I could catch that and go, hey, wait a minute, you guys are way overspending here. What are you out there doing? Why are you doing it that way? Why'd you choose this and stop a problem before it even happens?

Not only that, you know exactly where the hole in the bucket is, so to speak. You know, who's the person who's overspending, what category they're overspending on, which merchant. If you thought your, you know, Lowe's Lumber is going to be $5,000 and you end up spending $7,000, you know that in real time very easily, essentially, that's pretty cool.

So is there any AI involved with this artificial intelligence that's taking this receipt and doing the things that it does? Like, is that a part of what you guys do? Or is there any kind of reporting that looking across the data that's happening for a company that says, hey, you could save money here or you could do this there and solve some problems? Have you guys gone down that road at all?

Yeah, so we're definitely leveraging AI, as a couple of tech guys can be expected to do in two main ways. Way number one is reading the data on the receipts correctly. And that's another thing where we're slightly different than the incumbents that concurs and the expensifies. So we leverage AI plus OCR technology to get actual real data. Even when the receipt is all crumpled. We've all seen them. So we get you stuff it in your pocket and then you hope for the best. We still save the data then. That's one way. The other way is that we automatically match the type of spend to categories. And so we know and the category comes from your chart of accounts in your QuickBooks or your NetSuite or your Sage. We grab that because we integrate into those as well. And we recommend what you should be attributing that expense towards in your chart of accounts. Now QuickBooks does it too, but based on heuristics. Meaning QuickBooks knows that Uber is always traveling. But what if it's Uber Eats should be meals, Right? And they don't have a solution for that. Across, you know, every vendor in the universe, we look at how your business had categorized spend before, and we make the prediction based on your data and not on someone else's data, which makes the whole world difference, essentially.

So. So how much of my data are you able to see and how protected is it?

That is the million dollar question, so thank you.

I'll take a check, please.

Okay. That is the $100 question.

Oh, that's how it usually goes.

So we obviously use full bank level encryption. Not only that, the data that we get comes in through our banking platform. So we are directly integrated with Visa. So it's their encryption with Amex, with MasterCard, if we can connect directly. If we can't, we go through a platform called Plaid, which is the largest platform for banking data in the US in the world, probably. So they obviously are under deep, deep regulation for data security and such. We host our data on Amazon servers, so can't get anything more secure than Amazon, probably. And your data is your own. So everything's encrypted, even on our servers. And if you want to delete your data, if you want to migrate off, then obviously nothing remains.

That's pretty cool, Plaid, because I'm not real sure I've heard it before. I know it's a big thing. It's a little bit like a stripe type setup. Is that right?

Stripe is more of a payment processor. Plaid is a middleman for financial data. So companies like us use Plaid to connect to Chase accounts, for example, and get the data. So we only have visibility data, but we can't control weekend wire money, basically.

Gotcha. Okay, perfect. So where do contractors consistently lose money? Have you been able to start looking at the data and stuff from where you guys are? This is where it seems to be most consistent.

Yes. A lot of times they just miss expenses that need to be attributed to a job. And either they don't know about it until after the job is done and the client has paid the money. And they can't go back and say, hey, you actually owe us another thousand bucks for this and this. That would be the number one by a very wide margin. Because contractors are not great about. They're constantly chasing the next job. Right. They're really good at making money. Not so good at making sure that the money that they charge actually Stays in their pocket. And it's exactly because of things like what I just mentioned. So that is number one by far. Track your expenses in real time. You don't even have to use something like clear, right? Just do it with text photos of receipts to yourself or to the office manager. Get them to download those every end of day to a folder, keep an Excel file and just have the office manager fill that out every day. Don't wait till the end of the month because then it doesn't happen. There's too many of them. But at the end of every day, right? It's not a lot to ask and I guarantee.

Hold on a second. How much does clear cost?

So clear costs 239amonth for up to 10 spenders.

It sounds like I could say that 239 in like one day. Just in what I would be paying somebody to do a spreadsheet and like manage folders and all the other garbage. You're like, Jim could do it for.

Free, but you can say that I'm biased. So I can't say it's a no brainer and that it pays for itself in the first day, but it does, right?

I'm a math person. I'm a math and a time person, so I always do, hey, what's my return on investment? If I'm going to spend money, does it make me money or save me time? If you buy software for any other reason, you should not buy software. It's just that simple to me. I really hate interrupting these videos, but I've got some important information for you. If you haven't tried out Atlas shingles, you should because they put you first as a contractor. They want to give you a competitive advantage out in the field so that you can win more sales and be more profitable. Check out Atlas in your local area, find your local rep, get hooked up with them today and start making more money tomorrow. And so if I can save more in time on the expense that I would pay to somebody to do that, that they could be doing something else that might generate more revenue because they were doing that, it seems like a no brainer.

That's our position, obviously. And even if it saves four or five or six hours of your both tech business owner and office manager all trying to figure like one expense out, which obviously happens multiple times a day sometimes, obviously it's a no brainer, but I'm not even talking about that. I'm talking about actual lost dollars that have disappeared from your pocket that you forgot or didn't have the system to track and that, you know, it's just lost revenue. A client owes you money, he's never going to pay it because you missed it in real time.

So yeah, because that Home Depot or Lowe's or ABC or Beacon or whoever you're buy your materials from doesn't usually come through in a way that says, hey, this is by job, all that other good stuff, Beacon and abc, you're a little better at it. But hey, this is your bill from Home Depot.

Boom.

Pay it and you pay it. And there was a little receipt in there that was supposed to be for this job and nobody caught it for whatever reason. And those things add, I, I know from experience we had a shoebox full of receipts and we went, I don't know what job that goes to. I have no idea. Like, the guy would bring it in like two or three weeks after he made the purchase. We're trying to figure, we're like, what job? He goes, I can't remember. And so we would just literally like write it off, like try to figure out it was an overhead expense instead of a job cost expense, which shot our overhead through the roof, made our jobs less profitable until we figured out a process to manage it, which sounded a lot like the one you gave me, which is, all right, let's create a spreadsheet, track every single thing, which was absolutely cumbersome. Why so passionate about this?

Like I said, I'm a tech guy. It means I love automations, I love optimization and I love efficiency. And when I see a place where I can come in and provide these three things and then actually see with my own two eyes how businesses and people's lives change, like almost instantly, that, that gets me up in the morning, that this is a place, look, I could have very easily gone into cybersecurity or something, right? There's a lot of me over there, but the improvement is marginal over there. You know, all the smart tech guys are there.

Yeah, I got a buddy that's in that, in that world, the cybersecurity world. And it's a pretty, pretty competition heavy world.

And here people are super intelligent, but for a specific type of thing or for a different type of thing, I should say. And when I come in with my expertise and my team's expertise and we say, hey guys, look, this is how we suggest that you do this, try it out, see what happens. And we see such a huge change. It's just amazing, right? This is what I'm passionate about.

So I have a question. Where does it all stop because this is one of those things I've been thinking about and haven't really talked with anybody about yet. So I'm going to bring it up to you. Sounds like this might fit your wheelhouse. Where does it all stop? We Pay for a CRM. We pay for clear. We pay for QuickBooks. We pay for a field sales management tool. There's so many tools, right? We pay for ChatGPT4. All the different stuff that's out. Where do you start to have this law of diminishing returns? And I'm paying for all this, so how can it possibly save me any more hours?

I think that's a great question. And I'm going to put on my entrepreneur marketing consultant hat for a second here. And this is what I told every company I have helped in the past. Everyone's going to come at you with some sort of a commercial offer, right? There's a million types of services, SaaS, whatever. Not even just software. It could be anyway. Everybody wants to sell you things.

Oh, I left out a whole bunch. Marketing guys that can get you 30 leads in 30 days and business coaches that will help you 20x your business, that kind of stuff. You got all these things that you could spend money on. Where does it stop?

So my question is, and this might be an unpopular opinion, but does it need to stop? I mean, look at every specific and I'll explain. I know coming from me, I'm obviously biased, but the CRM, can you imagine your life without the CRM? It costs money, right?

I can remember putting that thing out there for the very first time. Like, the only thing that existed at the time was like, Salesforce, right? Which is super complicated. The home service guys are like, no, don't want anything to do with that. And then we bring this thing called Acculinx out.