From a duo to almost 100 FTEs: How Lili’s co-founder refines product through her experience owning an SMB

Small business owners have long grappled with managing multiple finance and accounting software, which can cost up to nearly $50,000 annually. Recognizing this issue, some SMB-centric platforms are beginning to offer more cohesive financial experiences. Lili is one example of this emerging trend.

What sets Lili apart in a sea of SMB-focused apps is its rare product combination, which has contributed to its growth and popularity over the past five years. The neobank integrates banking, payments, invoicing, and tax management into a single app. By combining a checking account with AI-based accounting and tax preparation tools, Lili enables business owners, including self-employed freelancers, to manage their finances, simplify tax filings using transaction data, and monitor deductions.

Today we take a closer look at Lili’s journey from inception to evolution through the lens of co-founder and CEO Lilac Bar David, exploring how her personal experience as an SMB owner shapes her firm’s product development strategies. 

From concept to creation

Co-founders Lilac Bar David and Liran Zelkha brought Lili to life in 2019. The concept for Lili was born from a gap in the market that highlighted the struggles of SMB owners to have a one-stop-shop solution to manage their businesses’ finances. Combining her personal experience with extensive research and testing, Bar David and Zelkha saw the potential to fill this gap by creating an integrated banking app.

Lili’s strategy for gaining customers in the US was centered around identifying and focusing on this particular niche market.

“We chose to focus on a small business venture because we wanted to target a segment that is large, growing, and evolving,” Lilac Bar David, CEO and co-founder of Lili told me.

Taking on co-founder roles and entering the US SMB market, crowded with existing apps, presented a host of fresh challenges for the team of two. These challenges ranged from navigating technical complexities to making other decisions, such as choosing a company name that holds personal significance for the founders.

“Funny enough, one of the most difficult leadership decisions I had to make early on was the name of the company,” said Bar David.

After many late nights of brainstorming, Bar David and Zelkha finally decided on the name Lili. It combines the first two letters of Bar David’s first name with the first two letters of her co-founder Liran’s name and also reflects Bar David’s fondness for lilies, the flower.

When technical challenges meet previous founder experience

Given that software is central to their platform, the founders faced critical technical decisions about whether to build or buy certain technologies. For key infrastructure, they chose to partner with providers like Amazon Web Services to ascertain their technology stack could handle real-time data access and automation, which they believed were essential for the integrated experience they envisioned for Lili.

“We had to weigh cost, time-to-market, and the quality of service we wanted to provide,” noted Bar David. “Our philosophy was to own the overall technology and have direct relationships with key partners like banks and credit card providers to create a better user experience and add significant value.”

Additionally, Bar David took on the dual roles of being both a co-founder and the company-facing CEO. But Bar David’s background of over two decades in banking and payments, including founding Pepper, an Israel-based SMB startup, helped to ease her transition into the current role.

Previously, she also served as EVP of Business Development for Max at Bank Leumi, where she built strategic partnerships and created a program for early-stage fintech startups. But it is during what Bar David describes as a career highlight where she honed her leadership skills: founding, Pepper, one of Israel’s first challenger banks focused on young adults. At Pepper, she along with her team introduced a range of products such as B2B payments, buy now pay later options, and fractional share investments, contributing to the bank’s growth.

Bar David faced comparable challenges with Lili but she was well-acquainted with the necessary steps to manage a startup and channel the knowledge gained from creating Pepper into her next venture. Additionally, her co-founder, Zelkha, brought a decade of freelancing and gig economy experience to the table, providing practical insights into the business.

“Lili itself is a small business, a company that started with two founders and now has less than 100 employees. When I founded Pepper, it also began as a small business with only one employee – myself,” Bar David said.

The evolution of Lili’s product suite

In the early stages of both companies, Bar David had to juggle multiple responsibilities — payroll, HR, operations, marketing, bookkeeping, and accounting — all of which were complex and time-consuming. 

“Managing [their] business isn’t just banking,” she said.

One of the primary pain points, for example, is handling tax returns. Without automated tax deductions available in corporate settings, small business owners frequently overpay on taxes. Additionally, they often spend hours organizing expenses or setting aside tax reserves monthly. This results in the need for investing in more tools and spending significant time and money on manual transaction reconciliation.

“After speaking with small business owners, we learned just how much more complex and time-consuming the financial needs of small businesses are compared to consumers,” Bar David said. While there isn’t a definitive guidebook for managing a small business, she resonates with the challenges small business owners face, having lived through them herself.

This is what drove Lili to offer an uncommon toolkit of banking, accounting, and taxes integrated into a single platform.

Lili’s product suite has evolved with features added over time that weren’t part of the original offering. The team initially started with a focus on basic expense management before expanding to provide a more comprehensive solution. 

AI has been at the heart of the app since its launch, and the firm has continuously built upon it. While the app uses AI to offer CPA-level services to SMB owners, the firm has also recently rolled out Accountant AI, a generative AI-powered tool designed to answer tax and accounting queries of business owners through a chat interface. The chatbot is backed by Amazon Bedrock, which underscores Lili’s ongoing collaboration with Amazon. According to Bar David, the chatbot underwent six months of training and was initially tested with 5% of Lili’s users before a broader launch.

Bar David’s experience as a small business owner gives her a dual perspective on both customer needs and leadership challenges. This understanding enables her to relate to other SMB owners and design products that are intuitive yet practically aligned with SMBs’ operational needs.

“My commitment is to keep our product development aligned with the real-world experiences of our customers,” she said. “At Lili, we are not afraid to pivot when the data tells you that it’s time.”