I have learned a lot of lessons in my time in business. I feel fortunate to have helped two companies start from the ground floor during my career. I would like to write about how I did everything the right way, and how the success of the company I work for today is directly a result of my skills, but that wouldn’t be true. There is an expression, “I would rather be lucky than smart.” I am a firm believer in that adage, as it is essentially luck with some splashes of logic that have led me to where I am today. In the 15 years that I have been with my company, there are three major things that luckily happened right when the company needed them to in order to create demand in the marketplace for the software we sold: (1) SaaS, (2) Enron, and (3) real estate.
One day I got a call from my brother who said I should look into this “cloud thing”. He told me it was getting really popular. I then in-formed him that I had started two cloud companies from the ground floor, and that the second one was 12 years in operation and going strong. He was a little shocked.
In 2001, creating software that was solely web-based was a very uncommon thing. In retrospect, we were pretty genius in using this method, but the reality is that it was the least expensive option to create software. Microsoft wrote a case study on how we were planning to use the software. At the time we didn’t call it “the cloud” or SaaS; we just referred to it as “on the Internet”. In the early days, the biggest objection that people had to using our software was the fact that it was Internet-based. We had deep conversations about 128-bit encryption, HTTPS, and password strategies. Today, we obviously don’t have any of these conversations. We got really lucky, because “the cloud” is now an everyday term, and it would actually be strange if, as a software company, we didn’t have a web-based solution.
I recently spoke to a group, which is one of my favorite things to do. I think that my humor is much better in person than in print, and I apologize for pointing that out right at this moment since you’re reading my article. However, while I was speaking to the group, a young man who was born the year after I got married (I still can’t believe he is old enough to be in corporate America) asked what the turning point was for the company. I told him that Enron was definitely an event that contributed to our success as a company. He told me he remembered hearing about Enron in grade school (I paused to let the groans and laughter die down). Once Enron, and other companies, perpetrated their fraud to investors, two senators, Paul Sarbanes and Michael Oxley, created a law to ensure that investors would be protected from fraud, and that the C-suite couldn’t plead the Fifth. The law they created requires public companies to have a repeatable process that has tracked and recorded activity in a database that can be accessed later by accounts payable. By sheer coincidence, that’s exactly how we built our software. Therefore, companies that purchased our software were automatically Sarbanes-Oxley compliant. So, this was a major added benefit and solved a business necessity, which really drove our sales. What luck!
We were really lucky with our decision to develop SaaS-based software, and that the software we built would enable companies to be Sarbanes-Oxley compliant. At the time, it didn’t seem like much of a big deal, but looking back I can see how it changed and propelled the business. However, those two things were nothing compared to camping out in a single industry. AvidXchange started out as an online electronic marketplace for real estate companies; that’s why “Xchange” is in our name. Our first offering was a bid management tool. Our second offering was electronic purchase orders, so we went to market with our PO and bid management offerings to attract buyers and suppliers in the commercial and residential real estate space.
We were marginally successful, which was not our goal. We weren’t setting the world on fire, and we only had a handful of clients. Then, in 2002, one of our clients brought up an excellent point. The client explained that our offering created a really strange process because they could do their purchase orders electronically but were still sending paper invoices. The client then asked a question that would forever change the course of our business. He asked our CEO if we could make an offering that would enable him to send the invoice electronically and match it with the electronic purchase order. My CEO then asked our client a very important question. He asked him if it would be something that they would be willing to pay for. The client promptly said, “Yes.” And then our CEO replied, “Well then, we can do it.” He then drove back to the office and asked, “Can we do it?” As it turns out we could, and we did.
However, that’s not the important part of this story. The idea of accounts payable automation was such a new one, and I wish I had a screenshot of our first version of the software because it was very basic with no “wow factor” whatsoever. The feedback we received from our clients helped to mold the offering into what it is today. To ensure that I am painting the right picture, all of our clients at the time were in real estate, so the feedback was very industry-specific. We stayed focused on real estate thinking that the offering we were building would only work for real estate. Having a focused vertical presented us with a targeted strategy and a solid base of potential customers to purchase our software, and they did. There weren’t any other industries that really caught our attention enough to make us move in any other direction, but then a strange thing happened. We realized that the problems we were solving were not real estate-specific problems; rather, they were accounts payable problems. So, we started expanding outside of our vertical. At first we tip-toed into other industries that were similar, like banking and finance, and then we branched out into a multitude of industries.
The moral of the story is not to highlight how shockingly unorganized my business life has been, but rather to communicate the importance of evolving to meet the needs of the market. If we had not been open to change, then we would have failed. If we’d stuck to the electronic marketplace come hell or high water (one of my favorite southern phrases), then AvidXchange wouldn’t be in business today. However, what we were steadfast about once we recognized our success with electronic invoicing was the real estate market, even though conventional wisdom might have led us down a different path. Our initial focus on one vertical helped us to make the most of our marketing dollars, really understand the nuances of how to speak to the real estate market, and fully address their problems. A by-product of this approach in the real estate market was a really great grassroots strategy, because people within the same industry talk and trust other professionals within the same space. Our initial clients ultimately became our biggest advocates and a critical part of our sales strategy. We have moved on from real estate and have been servicing other industries for years now, but our start in real estate taught us the importance of fully understanding the verticals that you are going to sell to. As we have moved into other verticals, we have done the same level of due diligence that we did for real estate to understand our buyers and meet them where they are with solutions that solve their business problems that are inherent to their industry, and moreover, to their job function.
Wish to talk more with Chris about fearing presentations less than death? Contact him at Celmore@avidxchange.com.
Read more articles from The Partner Channel Magazine Spring 2015 issue by downloading your online copy.