Ravi N. Raj knows a thing or two about building and selling successful companies.
As the VP & GM at Kosmix, he led the company through an acquisition by Walmart. He then served as the Vice President of Walmart Labs—the retail giant’s innovation studio—building dozens of products from the ground up and acquiring over several to accelerate the lab’s growth.
And in 2020, Ravi successfully sold his own company to ServiceNow.
Passage AI’s growth has been wildly impressive since it started in 2016. In just two years they were serving some of the world’s leading enterprise brands, like MasterCard, Shell, and Ford Motors.
Today they are part of Service Now, where they build conversational AI, or chatbots, that help companies deliver great customer service while automating repetitive tasks and answers to frequently asked questions.
Yet, what’s one thing this AI company didn’t automate?
Yes, there’s just a touch of irony that AI enthusiasts like Ravi and his co-founder tracked their own books by hand. They knew they would eventually get a professional bookkeeper, so a spreadsheet helped them keep records in the interim.
But a few challenges emerged for the rapidly growing company—especially since Passage AI quickly acquired paying customers. For one, manually trying to do bookkeeping for complex SaaS financials proved difficult. As Ravi shares,
“We didn’t know the proper accounting methodologies, like recognizing revenue for a SaaS company. When companies pay upfront for a two-year monthly contract, for instance, you have to recognize that revenue over two years. We’re not bookkeeping experts, so we didn’t do that correctly until working with Pilot.”
Tracking their books also took a lot of time, which they simply didn’t have. So, after raising a Series A, Ravi knew it was time to bring in the experts.
They surveyed the market and Pilot rose to the top for two main reasons: Startup expertise and competitive pricing. According to Ravi,
Pilot is a SaaS company and they work with many startups who are as well. We had confidence they’d understand our business.
Pilot’s software and expert service makes migrating historical books easier than most services. In Passage AI’s case, Pilot cleaned and rebuilt their books from the start of the company’s formation.
Here’s how Pilot got Passage AI’s books up and running:
Thanks to Pilot we have professionally-maintained books for every month the company existed until the acquisition.
Maintaining airtight books and reporting accurate SaaS financials enabled Ravi and his co-founder to focus on what mattered most: growing a successful business. As Ravi shares: “Not having to worry about bookkeeping has saved me and my cofounder a lot of time.”
Pilot also saved Passage AI money by flagging unpaid customer invoices. With Pilot, companies get books with unmatched accuracy: In fact, Pilot checks each month’s books three times through a combination of proprietary software and expert reviewers.
“There were times when our customers didn’t pay on time or we forgot to invoice them. Pilot would flag it each time, which allowed us to quickly address customers and be more proactive about payments.”
With Pilot’s help, Passage AI was able to maintain timely payments and keep a positive cashflow.
Better books and accurate SaaS revenue recognition made it easier to track growth and set targets. Updating stakeholders also became much simpler.
To give our board and investors quarterly updates, I just forward what Pilot sends me. It saves a lot of time and there’s never any back-and-forth with investors.
Due diligence isn’t supposed to be easy. There’s usually nothing more frightening than a third party looking under the hood to scrutinize every tiny detail, decision, and transaction.
Having overseen many acquisitions, Ravi has seen the worst: “When I acquired small companies at Walmart, their books were a mess. But having our books be really clean made the process really easy. Plus, Pilot stepped up with M&A support. They even participated on calls to explain how financials were recognized and accrued.”
Pilot recognized the need to make it seamless for founders. You can’t have long meetings to close every month’s books. It’s all by email, which saves a ton of time. It’s just affordable, efficient bookkeeping.
Founded in 2016, Passage AI focused on building conversational artificial intelligence, or chatbots, to help companies deliver great customer service while automating repetitive tasks and answers to frequently asked questions. In 2020, Passage AI became part of ServiceNow.