Persistence is probably the first and foremost quality that distinguishes successful startups. You really need to be able to stick with your idea through the rough times and work steadily towards your goals. It can be difficult in the beginning, when you aren’t seeing the fruits of your labor. Startups are rarely — if ever — overnight successes.
Startups have such a glamorous reputation. Companies like Facebook, Instagram, Youtube, Uber, and Airbnb once started as scrappy startups with huge dreams and even bigger obstacles.
Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?
In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.
I had the pleasure of interviewing James Thomas.
Founder and CEO James Thomas founded Itemize to help companies address digital transformation challenges. Based in New York, James has worked in the financial services industry since 1991, serving in senior positions for giants like Morgan Stanley and Mastercard. With his intensive background in payments, he knows the industry inside and out.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I’ve always been involved in finance and economics, since college. And my current work came out of my experience working in the industry.
After at least two decades of working in senior-level positions, I had come across numerous issues in Financial teams due to mundane data entry tasks. Accounting and Finance departments were entirely focused on laborious and costly data entry and reconciliation tasks. Either they did not have an automation tool to progress quickly, or the automation they did have was insufficient.
So, in 2012, I founded Itemize so these teams could shift to higher-value activities through offloading the manual work to Finance and Accounting automation.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
Over my long tenure at several payments and financial services companies, including powerhouses like Mastercard, I came to understand how big the “payments” industry really is. This infrastructure drives our economy as we know it today. But while the rest of the financial industry has accelerated its use of technology, payments were lagging.
With advances in data and analytics, I realized how much data could positively affect the payments industry, particularly commercial payments. To get there, though, there would need to be a huge shift in mindset and technology. Until recently, data was hardly seen as an asset, and even today, many firms still use manual data entry. This causes so many issues, such as making records susceptible to human error, fraud, and long processing times.
When I decided to create Itemize, I did so because I realized that technology could really fill this gap and reduce processing issues for most organizations.
Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?
I started this business because of my husband who is an architect. We had decided to build a house in the Hamptons as a development project, and his first show house to feature his work.
He designed the house. I ran the budget, vendors, and tracked all the invoices. But I struggled along the way to keep the paperwork straight, to put bills in the right categories, and file them away properly. One pile even got damaged by an errant bottle of Gatorade! I needed a 21st-century solution. It didn’t exist.
So I started thinking about how I might build one, a system that would read invoices, categorize them, put them into an accounting system, and then file away the digital images and data for future audit needs. From that Itemize was born.
What do you think makes your company stand out? Can you share a story?
We are in a crowded space but, interestingly, we don’t have that much competition. That sounds crazy.
Most of our competitors are selling tools, not out-the-box-ready services. Their tools take time, people, and documents to train.
In contrast, we operate a platform for transforming and exchanging data, one that is basically ready on day one to deliver specific services to specific clients.
The other way we stand out is that we are specialists in B2B Accounting and Finance applications. We are not generalists. We have the opportunity to focus deeply on these use cases.
To do that we draw on our team’s vast experience in four critical domains:
- Artificial Intelligence & Data
- Commercial Payments
- Tax processing
- B2B Accounting & AP
We are deep down in the weeds in these areas and have unrivaled information assets, decision engines, taxonomies, and other capabilities that general firms cannot muster.
And all of this is manifested in best-in-class services for corporate accounting and financial professionals.
How have you used your success to bring goodness to the world?
Our success at Itemize is the first step to significantly reducing costly issues like expense fraud. But we also save companies time and money in that automation frees up time for their workers to focus on important tasks. So, they spend fewer resources on manual tasks like processing reports, especially now that human error can be largely eliminated. With these freed resources, firms can focus on what matters — their customers.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
First has to be a willingness to take risks, or I would not have gotten into this in the first place. You really must be comfortable with not knowing the outcome, even if you prepare extensively. The market is unpredictable.
Second, I have a pretty strong contrarian streak that helps me explore new ideas and get on a strategic mission — in this case, creating a new and different way to deal with an old problem.
Third, I am more comfortable just doing the work than talking about it. I learn more and accomplish more by throwing myself into something and letting the process/data/outcomes speak. They produce more useful results than I can dream up on a whiteboard. And that moves both me and the business along.
Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?
This is an easy question — resist all advice that is a repacking of somebody telling you to play small ball. It’s an attractive low-risk comfort zone for the timid. It doesn’t scale, and it can frequently be an exactly correct formula for death. On the other hand, I am definitely not advocating crazed “blitzscaling” which is sort of like pushing a parked aircraft down a hill toward a cliff and hoping you figure out how to start it before you get there.
Can you tell us a story about the hard times that you faced when you first started your journey?
When we started Itemize, automation already becoming a buzzword, but people were still confused. Potential clients were saying, “image what?” Education and improving technology in a rapidly changing environment had us going around in circles. But we kept at it.
To make things easier, we kept our base program simple, while adding new cutting-edge tech as it became available. This provided us with a bit of agility and innovation — two ingredients critical to success in fintech.
That’s why today we’re proud of our comprehensive system, which can now do everything we wanted it to 10 years ago.
Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?
Starting a company isn’t easy. It really helps to understand what industries you know about and focus on that. If you stay close to what you know, you will more likely be able to recognize opportunities and be seen as an expert in the space. And you’ll have your experience, data, and resources to back you up as you make disruptive changes.
The journey of an entrepreneur is never easy and is filled with challenges, failures, setbacks, as well as joys, thrills, and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder?
Not to sound too glum, but the honest truth of starting a business is that it is mostly hard and difficult for a long time, followed by a blossoming and or economic payoff that hopefully compensates for all the effort.
And I think the challenge is actually how to persist through all the lows. It’s not really about how to avoid getting drunk on the euphoria and going off course, although I suspect that could happen.
I think the greater challenge is downside management. Because there is a lot more of it in most cases, and it can easily have a more damaging impact on a venture.
The question is how to get knocked down 99 times and still get up for the 100th while communicating confidence that you’re going to get there. All the while, you’re plotting your course and contemplating amending the route. It’s all about being resilient and adaptable.
Let’s imagine that a young founder comes to you and asks your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?
I think true bootstrapping is becoming less and less of a viable approach, particularly in tech. I strongly caution against it, particularly for a young founder.
There are very few circumstances in which a young founder might bootstrap a company successfully. That’s not just because of the challenge of obtaining the right capital at the right time. It’s also because of the important need for the adjacent administrative services, advice, and performance feedback that robust institutional investors can provide. Ironically, the greatest value that a good venture firm can provide is actually not the capital itself.
Before you decide to bootstrap your business or seek an investor, you really need to ask yourself the following questions:
- Do I have a personal network that would enable me to raise this money?
- Do I have the time and energy to micro-manage the cash flows and working capital management associated with bootstrapping the business?
- Can I do that while also running the operational development of products and businesses?
- Do I actually know how to administratively run a business?
- Do I already understand our market-product fit, competitive differentiation, and MVP, such that we will be a lean operating company with a clear path to break even?
I know very few people if any who can answer these questions with a string of “yes sirs”. And that’s why good VCs exist and why they and their companies thrive together.
Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each.
This is a difficult one since several variables go into a successful startup — some of them, like timing and luck, are not in our control. But I also believe that if you work hard, consistently, you’ll eventually hit the right time and your business will scale. Generally, I’d say you need the following five traits to be successful in a startup venture:
1. Persistence is probably the first and foremost quality that distinguishes successful startups. You really need to be able to stick with your idea through the rough times and work steadily towards your goals. It can be difficult in the beginning, when you aren’t seeing the fruits of your labor. Startups are rarely — if ever — overnight successes.
2. Simplicity is also critical. You may feel rushed to scale up quickly or add too many features without adequate support to keep up with the competition. But this approach can snowball into an unmanageable mess and strain your already stretched budget early on. A simple and clear vision can help you understand which opportunities will really make a difference for your product.
3. The third thing you really need is a bit of optimism. I know that sounds a little contrarian since I typically try to prepare entrepreneurs for the long haul and focus on the downsides. But a healthy dose of optimism can prevent you from becoming too risk-averse. You need to believe in yourself and your product, and be ready to stick your neck out.
4. A focus on relationships is another necessity for success. You can be amazing at what you do, but having a network of support will get your message further. And, ultimately, you need feedback on your business from your team and external associates. So taking the time to foster positive work relationships is well worth it.
5. Plan for the worst. Running a startup can be difficult and many unexpected obstacles will pop up as you trudge along. You need to be prepared. While you can’t plan for everything, having a proactive mindset and setting up a strong foundation to protect against potential downsides will keep you afloat and reduce your workload when you eventually run into a problem.
What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?
I think the biggest and most common mistake is underestimating the overall challenge, and expecting starting a business to be easy. It’s anything but. Still, because success has many parents but failure is an orphan, we tend to hear mostly about successful start-ups.
Most of the time, it’s really hard to get a business going. It takes ten times the money and four times the time that you think will be needed. And it takes a far greater focus on honing a minimum viable product than most people appreciate. And existing players who don’t want their lunch eaten will fight back with everything they can muster.
That gets us back to my comments earlier about capital and resources. You’re going to need them, even if you don’t think you will.
Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?
Definitely. There are probably three main things I would suggest for entrepreneurs looking to maintain a healthy balance:
- Focus on what makes you happy. At some point, you’ll need to make sacrifices to accomplish a goal. And you want to sacrifice for things that matter to you.
- Embrace progress over perfection. The unicorn product is a myth, and most good things take time. So, keep at it!
- Act with integrity. This will keep you from making serious, compounding mistakes in bad times and help you in good times. And people will remember you positively.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I don’t know about starting an actual movement, but I think there is a lot of latent good out there that we could easily channel to everybody’s benefit.
From time to time I have thought about how to build a charity information and events clearinghouse for local organizations. We would bring together supply and demand in the charity space — a whole sector of society that needs to run reasonably efficiently but doesn’t have the same commercial structures and financial incentives to grease its operations and information flow.
But the idea would be a classic clearinghouse or exchange where charities post needs and participants post interests, and the platform matching them, both broadly and perhaps even for specific events. Lastly, you could overlay some nice incentive and rewards system to help make it all work.
The benefit to me as a member of my community is that I could easily find charities in my town this weekend that need a hand on something, and I could choose to go help out, spend some time with my neighbors, and have a fulfilling experience.
I think that would be pretty cool. Not too hard to build either. I’m sure a hundred people have tried to build this already. I just haven’t seen it done successfully yet or on a large scale.
We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.
There are really two people I can think of: Simone Biles and or Phil Mickelson. Both are extremely inspiring individuals.
Not only is Biles is one of the best gymnasts of all time, but she regularly pushes herself to perform extremely difficult maneuvers. And while Mickelson was considered a long-shot in the most recent tournament, he ended up winning his sixth career major at the age of 50.
For me, these two athletes really embody how dedication, patience, and hard work contribute to long-term success.
How can our readers further follow your work online?
This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!