AMA with Coconut CEO, Sam O'Connor

[samoconnor (Samuel O'Connor)]

@adam

Thanks for doing the AMA, Sam!

We’re both trained accountants, and entrepreneurs. I wonder what your take is on the stereotype that accountants are risk-averse bean counters?

Do you think an accountancy background has given you any superpowers as an entrepreneur?

Hahah, thanks Adam. I hear all the best are accountants in a past life!

My mum who is probably my biggest supporter, raised an eyebrow when I chose accountancy. But Coconut is my second business in the sector, the first being ProConfirm (acquired by Confirmation back in 2014).

When it comes to Coconut, I don’t think Adam (my Adam) and I could have done it without being accountants. There’s so much complexity around accounting and it means we can build really rich and innovative experiences for customers because we understand the nuts and bolts.

I don’t know if I learned any superpowers in my accounting years (apart from a bit of VBA of course)! But I definitely did learn superpowers when selling software to accounting firms when I was working at Confirmation after the acquisition. This was quite a transformation from auditor to commercial.

Do I think accountants are risk averse? I do think there’s something quite strange about the way accountants are trained - in the UK at least. I was one of 1500 new graduate recruits in PwC in 2008 (just before the financial crisis). We all went to college together as Lehman Bro’s was collapsing. And we were told every day, don’t think for yourself, just do what you’re told and you’ll pass the exams and not get fired. There was me thinking, if we are going to innovate and learn from our mistakes to stop the world crashing down, we should be saying - think for youself! Do bold things. Take risks. I’d love to see more of that introduced into accountancy training, then I think we’d see some awesome entrepreneurs come out of that world.

[samoconnor (Samuel O'Connor)]

@Atif

I personally prefer Seedrs due to its Secondary Market and also it’s community, even though I am an investor in both Seedrs and Crowdcube . I Definitely would be interested in investing if you ever decided to go with Seedrs

I will try and make this happen Atif. You’re not alone in this.

[Atif]

@samoconnor

I will try and make this happen Atif. You’re not alone in thi

Look forward to it

[Freetrade_Team]

Which other products do you admire, either in fintech or elsewhere?

[samoconnor (Samuel O'Connor)]

@Wjfreeman7

What was the driving factor for your move away from the lucrative world of chartered accountancy? And what were your biggest challenges in the early days of ProConfirm?

I actually chatted at length with Thomas Fairey on the Back Yourself podcast this week. Look out for it when it’s published.

I did find accountancy to be a solid place to start, but I’ve been starting businesses since I was quite young. Starting with some club nights, moving onto an environmentally friendly cleaning company called Clean Conscience. I think it’s the process of building something that really draws me in. I couldn’t stay in the corporate world for too long.

ProConfirm was really tough early on. We were fresh out of audit and found a problem that we knew well. But what’s really important in a tech startup is finding your market. We realised quite quickly that to make it work well we would have to get one of the big 5 banks in the UK to use our software. Having never sold software before, we were quite optimistic about what we could achieve. Bank sales cycles take years and are getting harder and harder for startups.

We were lucky early on to meet the right people, particularly at the British Bankers Association (now UK Finance). We also developed the tech so we could provide value to auditors without necessarily having a bank on the platform, giving them a better process management tool for Audit Letters.

In the end, we got enough momentum and traction that we got an offer to buy the business. This was great because it meant we could suddenly work on a global market rather than just the UK and things moved very fast after that.

[samoconnor (Samuel O'Connor)]

@missponyta

To maintain my shares, I had to invest approx £16. Done. Waiting for the next round to invest more.

Thanks for the support! See you next week on Crowdcube.

[samoconnor (Samuel O'Connor)]

@anon810895

Hello Sam

Thanks for doing this. (I’m a shareholder).

What does the roadmap look like for Coconut this year? What features can you share that are just around the corner?

Whoop whoop! We have some very exciting stuff in the pipeline.

To give you a view into how we’re thinking, the last two years have been about building “bedrock” features. The ones that you need as a base. We’re now moving onto creating real competitive advantage through knitting together experiences for customers that deliver extreme value.

Coming Up Soon - next few months

• New Tax Dasboard (launching next week with corporation tax for limited cos - which is new, image below)
• All clickable so you can drill down into your business insights
• Soon we’ll have 24 months look-back on Open Banking for new customers, so when you hook up a new business account we run our categorisation for tax and cleansing (Accounting Intelligence TM), and you get business insights with no data entry
• Updates to invoicing - allowing logos on the designs plus a few other cool tweaks
• Add manual transactions (like mileage, cash) and split transactions across multiple categories

Coming up this year

• Saving for Tax (AKA Vaults, with rules that mean you can set-aside and pay tax and VAT easily)
• Seamless VAT capture and submission direct to HMRC for customers and their accountants
• Payment initiation with Open Banking, make payments through the Coconut app from any connected current account - cool for things like paying an invoice in 30 days with a scheduled payment, or setting aside money for VAT, among many others

[Diversify (Radical Candor)]

Hi Sam,

The following is your Applestore ranking (solid rating). What can you do to improve your position, or is this not something you or your customers care about atm?

Also, you have a free tier and a £5 tier. Are you looking to alter revenue streams in the future in any way e.g. another tier?

[samoconnor (Samuel O'Connor)]

@Freetrade_Team

Which other products do you admire, either in fintech or elsewhere?

Hi Sam, thanks for the question.

My favourites, in no particular order!

• Freetrade, of course, for bringing Crowdfunding into the mainstream and proving that focus on community and customers cuts through
• Oaknorth, for being relentlessly simple in their initial proposition and profitable from day one
• Transferwise, for having one of the most justifiable unicorn valuations based on underlying financials
• Monese, for finding an incredible value proposition that just works for their target market really effectively
• Strava, for a product experience that reinforces the good work I do when I’m exercising, in between sessions - they’ve really nailed the delighters
• Pollen, for being the biggest holiday and experiences company no one has ever heard of (maybe showing my age here) and only ever interracting with me through Typeform and text message - they’ve really nailed it!

Please everyone share your favourites too!

[samoconnor (Samuel O'Connor)]

@neovo

In that case

1. Where did you see Coconut in ten years?
2. What are your thoughts on Coconuts mission and culture? (I particularly enjoyed watching this talk from Tom Blomfield recently - he describes it as “the way things are done around here”).
3. What lessons have you learnt since you last crowdfunded?

Thanks in advance!

PS I’m a investor but sadly not a Coconut user (no business ) , woo

Thanks for the questions @neovo!

1. Where did you see Coconut in ten years?

Our vision is to make self-employment easier than being employed. And our first job is to build the ultimate accounting and tax tool for self-employed people.

But there are some really interesting challenges that owner-managed people face, where there is an intersection between personal and business lives.

I would like Coconut to be the platform for this new economy, providing the tools you need from investing in the future, to saving, to getting a mortgage, to finding credit when you need it. This way we can become a really powerful companion for our customers, saving them time, helping them save money and empowering them to build awesome self-employed careers and businesses.

2. What are your thoughts on Coconuts mission and culture? (I particularly enjoyed watching this talk from Tom Blomfield recently - he describes it as “the way things are done around here”).

I’m sorry that I haven’t got time to watch the whole video, but will take a look sometime.

But I really like this question. I actually just asked someone in our team who joined a few months ago, to see whether their view matched up with mine. It largely did!

I think that at our stage of the business, we’re looking to try new things all the time. That makes us pretty adaptable - as we have to be. We adapt to customer needs, resourcing contraints, new ideas and so it’s really fluid how we work. It makes it pretty buzzing in terms of an environment to work it.

We’re also a small team so I find we’re pretty nimble when it comes to doing new things. Sometimes I think we’ve not got the balance right between going deep and going broad with features. We’re now focussing more on complete experiences rather than specific features.

Thorough is another word I would use. Our team builds good quality and dependeble software. It’s because our team is made up of experienced and deep thinkers who like doing things right.

I’m actually amazed sometimes how much we get done on a team of 15. And most importantly, we have fun while doing it. And on Friday, every Friday, the Top Gun soundtrack comes on to ease us into the weekend.

3. What lessons have you learnt since you last crowdfunded?

I literally don’t know where to start with this. It’s been an incredible 16 months. But one major thing I know is that a small team can get a huge amount delivered with the right focus.

I’ve also learned that Open Banking is going to transform the financial system. I sort of knew it before, or had a feeling, but now we’re in it, we can really see the power. This gets me really excited.

[samoconnor (Samuel O'Connor)]

@Diversify

Hi Sam,

The following is your Applestore ranking (solid rating). What can you do to improve your position, or is this not something you or your customers care about atm?

Also, you have a free tier and a £5 tier. Are you looking to alter revenue streams in the future in any way e.g. another tier?

Our ratings are a direct result of the experience customers have. And our research suggests they are really important to the evaluation about whether new customers should use a product.

We believe we can increase all of our ratings across the board as we add new features and fix bugs. This will definitely decrease the number of disappointed customers. But should also tip 3-4 stars into 5 stars, which is what we strive for. When you’re starting out, you have to prioritise pretty carefully. Sometimes we can’t fix things we know are a problem for some people for example because we’re focussing on other areas. But over time we can solve most problems if we do it in the right way.

Ultimately, our focus this year is on delivering extreme value quickly and helping people as much as possible. This should continually improve the experience and delight more people over time.

In terms of revenue

We believe that if you build valuable products, people will pay for them. And that way you can build a sustainable business that produces returns for investors and valuable experiences for customers.

At the moment we have a free tier called Start and a £5 tier called Grow which we’re starting to beef out to attract more customers. But we’re also planning to launch a £15 tier called Pro later this year.

Pro will have as its headline feature, a completely seamless VAT capture and submission process for both customers and their accountants in the portal, along with some other fantastic features.

Our paid tiers will encourage more customers to join Coconut, replacing their more expensive products like Xero and Quickbooks.

Our aim is to reach £150k or more monthly recurring revenue by December 2020.

We also want to build out our marketplace revenue which will make up 20% of overall revenue in 2020.

One important problem for our customers is managing uneven income.

This is a big problem that we want to solve this year for our customers, by working with a partner that’s able to offer credit to give our customers access to funds when they need it.

Marketplace services like these will make up around £100k of our revenue this year and over time will make up around 35%.

We’ll offer these through partners and are looking at Credit, Pensions, Insurance and Accounting Services in the medium term, so it will be a revenue share arrangement.

[neovo]

Cheers Sam! Great answers. Really excited about Coconut

[samoconnor (Samuel O'Connor)]

Hi Everyone, thanks for having me. I hope I’ve answered everyone’s questions but will check in periodically, so keep them coming.

Yesterday night we hosted a Webinar and Event for 100 people to talk a bit about plans and progress in advance of the Crowdfund. There’s a demo, some talk around revenue and a sneak peak at our Crowdfunding video too.

Here’s the video: https://vimeo.com/397183751/c20733d578

Chat soon
Sam