Mike Praeger: AvidXchange Presentation
Wharton, Harvard and Stanford alumni came together on October 26, 2016 at the law offices of Parker Poe to discuss AvidXchange, Charlotte's hottest growth company. Michael Praeger, Co-Founder and Chief Executive Officer told the story of how AvidXchange has grown from a zero to $100 Million software company.
Michael Praeger, Cofounder and CEO of AvidXchange
by Jon P. Vague, JD, MA, MBA, PMP
AvidXchange has been a great success story of fast-growth technology company in the “Silicon South.” It started from a core team conversation at Andersons Coffee Shop in Charlotte in the year 2000 to becoming today one of the top 100 cloud companies globally according to Forbes. The company was not an overnight success. What does the company do? It automates vendor payments for midsize businesses –better than any other company. In its 15-yr journey from procurement to payment processing, the company identified and solved a fundamental problem statement: how to add value to the 76% of companies that used paper checks for 80% of their business. The missing ingredients in the solution involved invoicing and accounting systems integration. Michael Praeger, AvidxChange’s enthusiastic and engaging leader, humbly stated, “it stumbled” into its successful business through luck. However, as Mike eloquently explained, there was a simple yet sophisticated method and discipline for this successful entrepreneurial venture. There were approaches to entrepreneurial risk-taking and growth deployed by the core company team. Mike’s presentation raises important lessons for both entrepreneurs and established companies. Following is a summary with some highlights from the Mike’s presentation.
Current company features:
- 6 thousand business customers in the U.S.
- 100 thousand vendors.
- 147 banks use them to pay their own bills.
- Makes money on both sides- purchasers and vendors.
- 527 customers closed last quarter, up from 1 customer per month 10 years ago.
- Major landmark 18 months ago -company expanded headquarters to Metropolitan Campus in Charlotte financed by Bain Capital Ventures; currently facing office space challenge and building the first of what Mike hopes to be multi-building complex at NC Music Factory.
- $250 million revenues goal targeted for 2018.
The value proposition to clients:
- Reduce labor -62% of total AP costs
- Eliminate/reduce fraud
- Minimize other costs
- E-payment adoption rates.
- Innovation - new supplier products and invoice accelerator products, giving suppliers the ability to get paid when they want to.
- Preserving core values and culture.
- Getting and keeping the right people.
- Office space.
- Great interest in innovation and growth potential, yet cannot grow as much through current self-financing without running out of cash.
The Journey for Growth
The “Avid Way” includes a method focusing on the following 5 factors:
- Define rhythms.
- Human capital is the greatest asset we have.
- Be bold and measure everything.
- Evangelize the future every day.
- Operate with grit.
Mike Praeger encourages all to start with a basic question -what bus are we on? He explained that the Avid Way hinges on rich dialogue at the quarterly offsites for executives the company has held since its foundation. Everything strategic came out of those offsites. They serve to reflect the last 90 days, innovate, and plan for the next 90 days. It was at one of those offsites that AvidXchange redirected from engaging in procurement to its core purpose –to revolutionize business payments. The simplicity of this methodology may understate its sophistication. Cognitive diversity, dialogue, constant experimentation and calculated risk-taking approach to innovation, are strong foundations for entrepreneurial success.
Company culture and human capital have always been at the very center of Mike’s attention. He said that culture is hard to keep and must be taught –the company established an internal competencies university. Mike unequivocally states that their most important investment is people. They invest heavily in innovative software development and sales and payment development.
How does the company keep innovation in the center stage of its culture? Constant communication is at the very center. It promotes enriching dialogue by taking deliberate approaches to communications among employees that include the development and tracking of quantitative metrics. Following are key considerations for the Avid Way of communicating:
1- Rhythm -Types of communications (cadence).
2- Visibility and accountability (Dashboard, KPIs and Metrics, expected for all leadership).
3- Embracing the methodology proposed in Crucial Conversations (by New York Times Bestselling Authors).
4- Use of themes -BHAG, Brand Promise, etc., to guide majority of company (the broader group reporting to the leaders accountable by metrics).
5 -Getting the right people.
According to Mike, the future success of AvidXchange will depend on its ability to fulfill its core values, including:
• Be Passionate about customer success.
• Win as a team.
• Innovate to change the game –a leader must innovate.