Don’t be afraid to pivot. It’s a natural tendency to avoid change in business, particularly when you already have customers and investors. However, most successful businesses have altered course from their original idea. Sometimes the real growth comes after a significant shift.
I had the pleasure to interview Michael Praeger. Michael is the Co-Founder and Chief Executive Officer of AvidXchange, Inc., the leading provider of on-demand accounts payables management and automated payment solutions. Since founding AvidXchange in 2000, Michael has been an active participant and speaker on “payables and payment automation” at various industry conferences and considered a thought leader within the industry in developing creative solutions and best practices for payables and payment automation. Michael has spent the last 20 years founding, managing, merging and selling technology and web services-related companies. Prior to establishing AvidXchange, Michael was Co-Founder of PlanetResume.com, a technology career enhancement and recruiting site that successfully completed its merger with CareerShop.com and CareerTV.net in November 1999. Prior to that, he was Co-Founder and CEO of InfoLink Partners and InfoVentures, LP. Michael also served as an Associate with Summit Partners, a Boston-based Venture Capital and Buyout partnership with more than $1 billion under management. He received a B.S.B.A. in Finance from Georgetown University. Michael is also a graduate of the “Birthing of Giants” executive entrepreneurship program at MIT. Michael is currently active in the Entrepreneurs Organization (EO), as well as the Young Presidents Organization (YPO). Michael is also currently serving on the advisory board of the North Carolina Technology Association (NCTA), and on Comdata’s Customer Advisory Board. Michael is revered as a leading business-to-business provider of innovative electronic payment solutions.
Can you tell us a story about what brought you to this specific career path?
My first foray into entrepreneurship actually happened when I was a student at Georgetown University. I wanted to stay in Washington, D.C. over summer break. My parents — who were both teachers in Wisconsin — agreed as long as I could support myself, so I started painting houses to make money. By the end of sophomore year, I employed 200 other students and was running a painting company out of my dorm room.
It shouldn’t have come as a surprise that after working in venture capital for three years post-college, I noticed every deal made me want to roll up my sleeves and get involved with the companies. That’s how I finally decided to make the leap into entrepreneurship because I felt like I could use technology to help these people address their daily business problems.
At 26 years-old, I raised the capital to buy my first software company. After years of working directly with cities and towns, and then subsequently human resources organizations, I turned my focus to the process behind B2B payments, which ultimately led to the conception of AvidXchange.
Can you share your story of Grit and Success? First can you tell us a story about the hard times that you faced when you first started your journey?
There were three distinct times during AvidXchange’s early lifespan when we had a very limited runway of capital left to continue operating. Each of those times, we thought outside the box about how the company could survive and identified unique ways to raise the necessary funds. The first time, we convinced more than 70 angel investors out of Greensboro, N.C. to make a sizeable contribution. In the next two instances, we restructured how our customers were billed to shift the cadence of cash flowing into the business.
Even though the solutions were different, the common theme throughout was trust. We had colleagues, customers and stakeholders who believed in what we were working toward at AvidXchange and remained committed to the company, even when the path was challenging.
Where did you get the drive to continue even though things were so hard?
If you become an entrepreneur because you want flexibility or control, then you’ll never be successful. It must be because you’re zealous about what you’re trying to build as a business. That fire is what keeps you going when it gets difficult. Whether you’re working 90 hours and sleeping in the office, or you’re not sure if you’ll see a paycheck within the next year or not, you don’t care because you believe so vehemently in your vision for the company.
So how did Grit lead to your eventual success? How did Grit turn things around?
The first two ideas we had for AvidXchange didn’t get us off the ground. Investors simply weren’t interested. But each time we revaluated our plan, we inched a little closer to the right model until we finally landed on it. Not to sound cliché, but the third time was a charm for us.
That early team, the five of us who worked so closely in the beginning, we were confident in the business case that we were trying to make. If we let those first two failures define us, then AvidXchange as we know it wouldn’t be here today.
So, how are things going today?
The growth that AvidXchange continues to experience is incredible. In 2015 when we broke ground on our new headquarters campus in Charlotte, N.C., we had around 300 employees. Since then, we’ve hired more than 680 people and recently announced plans to add more than 1,200 additional jobs over the next five years — essentially doubling our headcount. We were ranked as one of the fastest growing companies in North America on Deloitte’s 2018 Technology Fast 500 as well. This sustained growth is indicative of how well we’re doing not just with our products, but with our customer service and the level of talent that we continue to bring into the company.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
While I was a student at Georgetown University, I started painting houses to make money. Business kept coming in, so I hired a few fellow students, then more and more over the next year. By the time I was a sophomore, I had 200 employees and was running a painting company out of my dorm room.
We got the contract to paint all the dorms at George Washington University and then eventually at Georgetown as well, and determined we’d need to run three shifts a day with about 50 students per shift to fulfill the contracts. The crazy thing was, I didn’t understand delegation at the time, so I managed all three shifts and essentially didn’t sleep for three weeks to get it done.
When I graduated, I passed the company on to a few underclassmen who worked for me. Technically it was my very first business, created solely for the purpose of staying on campus over the summer.
What do you think makes your company stand out? Can you share a story?
One of the things that makes AvidXchange stand out is our people and the talent they bring to the organization. Early on, we recognized that understanding each person’s skill set and then forming a team where everyone could play to their strengths was critical for success.
I originally founded the company with David Miller, who was primarily responsible for building the product. He excelled at that, while I focused on the people aspect of our business: Getting employees and investors to buy-in on our idea. David and I knew that by dividing and conquering based on our unique talents, we had a much better chance at survival and profitability.
To this day, we still operate with that mindset at AvidXchange. I focus on surrounding myself with people who are smarter than me or have different experiences. History repeats itself, and if you learn lessons from others who have already accomplished what you’re trying to do, then you can take a more strategic approach.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
If you’re planning to be an entrepreneur, you’re going to work insanely hard. There’s a reason why 90 percent of new companies fail, and I don’t know very many successful people who didn’t just flat out work their way there.
The most important thing is remembering that solving business problems and working with great people is fun. You need to have a passion for what you’re doing. If you think of it as a job, then you won’t really be happy.
It’s imperative to recharge, too, to maintain that drive. Everyone has their own way to reenergize. For me, it’s being on the lake here in North Carolina. It’s also essential to surround yourself with great people. Having the right people around helps you maintain the pace and feel like you aren’t embarking on your mission alone.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
As an entrepreneur, having a support system of people who can relate to what you’re going through is critical. I’ve always had a coach, just like athletes do, and he’s certainly someone I’m grateful towards. Patrick Thean has run three different software companies, including one alongside my wife, Cindy. He listens to me but he’s also tough on me. He can give the right direction and support because he’s lived through it personally. Having a strong support system is critical — someone who no matter how bad of a day I’m having, I know believes in me and is always there to give me that extra encouragement.
How have you used your success to bring goodness to the world?
AvidXchange makes a significant social impact through empowering our employees. Because the company is successful, we can employ 1,200 people, and those people in turn can give back to their communities and bring more goodness to the world. We formed the AvidXchange Foundation specifically to fulfill this purpose around us by making a difference in children’s lives where we work and live. The Foundation has active leaders at all five of our locations, and in 2016, volunteered more than 1,000 hours of our time with community partners.
What are your “5 things I wish someone told me before I started my company” and why. Please share a story or example for each.
- Listen to your customers. Our very first customer had a significant impact on the direction of the business because we worked collaboratively to determine how our products could help solve their business problems. There’s power in tapping into customers’ wisdom, and they’re often a reliable compass to point you in the right direction.
- Don’t be afraid to pivot. It’s a natural tendency to avoid change in business, particularly when you already have customers and investors. However, most successful businesses have altered course from their original idea. Sometimes the real growth comes after a significant shift.
- The risk is in the initial idea, not the execution. In the beginning, it’s a cycle of trial and error, failing and then reevaluating until you get the right idea. That’s where the risk lies for a new business. Once you land on the right concept, then it becomes all about execution.
- Persuasion is key. The first five people who came to work at AvidXchange did so with no guarantee of a salary because they believed in our idea. You must be prepared to secure buy-in not just from customers, but from your employees and investors as well.
- Pain points = profit. Identifying a business problem that can be solved is the first step to conceptualizing a new product or service. However, if no one will pay to solve that problem, then it won’t work. It should be a big enough pain point that buyers are willing to invest in a product to help remedy the issue.
Based on your experience, can you share 5 pieces of advice about how one can develop Grit? (Please share a story or example for each)
- Don’t be afraid to fail. The first few ideas we had as an organization were not successful, but we landed on the right product and business model for AvidXchange because we grew every time our concept missed the mark.
- Build the right team. No matter how smart or creative, no one achieves long-term, sustainable success on their own. The right group of surrounding colleagues will help you to see things from a different perspective and avoid potential pitfalls. We’ve brought in leaders from companies like eBay and Fiserv specifically for this reason, because they’ve been where we want AvidXchange to be and can help us map the road to get there.
- Return isn’t necessarily immediate. If you expect instant results as an entrepreneur, then you will be sorely disappointed. We founded AvidXchange in 2000 and while the early years were critical, it wasn’t until 2015 that we really began to see the growth the company is experiencing now.
- Believe so passionately in your idea that risk doesn’t hold you back. The possibility of failure often prevents people from wholeheartedly pursuing goals, particularly when it’s tied to financial stability. If you tap into that passion, then business becomes a game. It’s something that’s fun to play and win at versus focusing on the gamble and grind that goes along with it.
- Find your niche. Both of my parents were teachers, so I didn’t grow up thinking I would start my own business. When you identify the one thing that truly emboldens you, then tenacity and fortitude are much more ubiquitous because it feels instinctive.
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. 🙂
People always ask, wouldn’t it be great to create more entrepreneurs? I don’t necessarily agree with that because it’s not the right fit for everyone, so the movement I would start is one that supports individuals truly carving their own path professionally. We’ve developed this stigma around what success “should” look like, but success is about doing what you’re fervent about. Whether that means you go to college and start your own business, or you become a valuable team member at someone else’s business, your contribution is just as significant. People are all wired differently, and we need to celebrate that more.
Thank you for joining us!