Rafi Spero was awash in expense receipts when he traveled as a consultant. To get reimbursed, he'd take the jumble of papers stuck in his wallet or pocket, line them up and make a photocopy to turn in.
Like others faced with paperwork drudgery, Spero thought there had to be a better way.
His idea was a portable scanner with software that could convert the crumpled receipts, business cards and other papers into digital files that could be e-mailed, stored and printed to reduce clutter and simplify paperwork.
He spoke to his father, Les Spero, who earlier had cofounded Strategic Management Group, a Philadelphia provider of computer simulations for business. The elder Spero was up for a new venture.
"It seemed like such an obvious idea, but no one had done it," said Rafi, who grew up in Merion and majored in psychology at Yeshiva University.
In October 2002, Rafi and Les Spero started NeatReceipts Inc. They hired a software engineer and designed the first version of the "Scanalizer," which was about the size of a pencil box and plugged into a computer.
The Speros invested $160,000 of their own money, raised $100,000 from Ben Franklin Technology Partners of Southeastern Pennsylvania, and attracted $100,000 from "angel" investors.
The NeatReceipts scanner debuted Thanksgiving 2003 and was sold at first over the Internet and in a kiosk at Philadelphia International Airport.
Sandwiched among kiosks that sold perfume, T-shirts, sunglasses and children's toys, Rafi Spero worked many 15-hour days. "I would use a TV screen to demo the software. People would say: 'I'm overwhelmed with receipts. What does this thing do?' "
Prospective customers were given a brochure before catching their flights, and some later purchased the scanner on the Web. "We were open 35 days in 2003, from Thanksgiving to Dec. 31," he said. "We sold 117 units in that time period. Our revenue was about $17,000."
Since then, NeatReceipts has gotten its product into retail stores - including Staples, Office Depot, OfficeMax, CompUSA and Sharper Image - and online at Amazon.com and TigerDirect. The company has 18 kiosks in eight airports and shopping malls, including the King of Prussia mall. The scanner retails for about $199.
Located in the Science Center at 3401 Market St., NeatReceipts has 90 employees and generated sales of $8 million last year. Revenue is expected to at least double to $16 million this year and projections are to more than double again next year, Rafi Spero said.
In August, NeatReceipts raised $5.5 million from Edison Venture Fund. The company has received financing from MentorTech Ventures and additional funding from Ben Franklin Technology Partners. In all, the Speros and outside investors have put $7.8 million into the company.
Last October, NeatReceipts was named the fastest-growing privately held company on the annual Philadelphia 100 list compiled by the Wharton Small Business Development Center. In December, the firm was designated "tech start-up company of the year" by the Eastern Technology Council.
"Les and Rafi are both experienced, dynamic and passionate about what they do," said Doug Petillo, partner in Edison Venture Fund's West Chester office.
"We're all trying to figure out how to make sense of the paper that's lying around our desks and in our homes," Petillo said. "These guys have unique technology that allows that to happen very efficiently and in an easy-to-use way."
NeatReceipts got a huge boost in January 2006 when Martha Stewart featured the scanner on her television show. Stewart used the scanner to organize recipes on her computer.
The day the show was nationally broadcast, the telephones at the NeatReceipts offices "just went nuts" with callers, recalled Rafi Spero, the company's chief operating officer.
"On Amazon.com, we became the No. 1 electronics product, ahead of iPods that day and the day after. Our revenue went to $2.2 million in the first quarter 2006," he said.
Scanners have been around for 30 years. What's different about NeatReceipts' product is that it does more than scanning. It sorts and categorizes papers into expense reports and income tax reports. The scanner has a feature enabling users to classify receipts according to IRS tax categories. All the data can be exported into various computer programs, such as Excel, Word and Quicken, or as a PDF.
"You can run a report that tells you everything you spent and what line items go on the 1040," Rafi Spero said. "If it's a business card, we'll read the information off your business card and put it in your Outlook contacts automatically."
Rafi and Les Spero say they enjoy working together. "It's exciting to do what you dreamed about doing and with your father," said Rafi, 30. "We argue a lot, but in a funny way. We are having a great time."
Les Spero, 57, who is chief executive officer, said his son is "more detail-oriented" and "has a better feel for what's practical. He fights back more than I do. He's more competitive and a little bit tougher."
The elder Spero, who has a Ph.D. from Harvard Business School, said he tends to have a "conciliatory nature. In terms of details, I tend to think more longer-term."
"We are partners in this venture, not a father-son team," he said. "We get paid the same. We own the same number of shares of stock."
NeatReceipts plans to stay at the Science Center in University City, although it is outgrowing its current 5,500 square feet of office space and will move soon into an additional 4,000 square feet in the same building.
The company's employees are young - the average age is 31. Only three are over 50. "For the most part, we get along very well. No one has left yet," Rafi Spero said. "We have fun. We do a lot of activities together."
No one has an office, not even the Speros. Because employees all sit together on one floor, job titles and departmental duties tend to mesh, Rafi said. "It's cool to watch how Kelly, the shipping person, will walk over and say, 'Hey, this isn't working. Stop doing this.' It allows you to be very agile and move very quickly."
With the latest financing, NeatReceipts is developing new products, including a bigger scanner that can scan a stack of resumes, insurance forms, warranties or bills quickly and sort them into digital drawers. "What we are proposing is the electronic filing cabinet," Rafi said.
The larger scanner, about the size of a home computer printer, will be introduced in the fall, geared to small- and medium-size businesses.
Soon, NeatReceipts will begin selling a tiny business-card scanner that could fit in a pocket and scan images, using color, and organize the card contents into a Microsoft Office Outlook contacts file.
Les Spero said the goal is to build NeatReceipts into a large business. "We've got other channels we'd like to get into - Sam's Club, Costco. We're on Costco.com. We'd like to get into the Costco stores. We'd like to deal with Circuit City and Best Buy, the electronics superstores," he said. "Everybody in this business builds on past success. It's like working up a ladder."