Chris Elmore, co-founder of AvidXchange, teacher at UNCC, and entrepreneur-in-residence at the Charlotte Chamber of Commerce, discusses how over the last seventeen years AvidXchange has transformed from a bootstrapping startup to a successful company who has raised over $500 million in the last year and a half.
The majority of people following the Charlotte startup scene are familiar with AvidXchange. If you’re not – their core product offers midsize companies payments automation of that awful accounts payable process. As Chris Elmore, a co-founder of AvidXchange, notes, they were one of the nation’s first cloud-based, software companies.
They started the company with a philosophy – they were looking for something that people were willing to buy, they wanted to sell their product at a premium, and they wanted customers to stick with them. It’s the achievement of this last goal that Elmore is especially proud – since 2002 the company has retained 97.7% of their customers. “The way we got that retention rate was that we built great software with excellent service [and] we took a process that people hate and we absorbed it – so they never want it back.”
However, it’s not as easy as it sounds. Over the first two years – from 2000 to 2002 – and three different products, the market told AvidXchange that it didn’t want what they had to offer. The market and customers are pretty responsive when it comes to software solutions that solve a specific business problem. It wasn’t until the fourth product that the market took hold of their software and the company started to experience excitable growth. But those first three are by no means viewed as failures as they each led to the next product.
Many companies fail in the first two or three years because they haven’t fully crafted a solution with that right magic sauce for the market. So through their first two years of product development the AvidXchange team stretched every dollar, spent money only when they made money, and proved their premium offering by excelling in customer service.
Since the beginning they’ve been an action first company – “we sell the idea and we sell it before the actual software is developed.” Their goal is to get into a pattern because that enables continuous feedback. Elmore cleverly puts it as – “feedback in the form of revenue.”
Creating the fourth product set AvidXchange on the trajectory for growth. But it was Sarbanes-Oxley that really accelerated that growth. Through this regulation, the government mandated that all public companies’ account processes be repeatable, trackable in a database, and time-stamped. Essentially, it forced companies to digitize this accounting process, and AvidXchange was that software solution.
AvidXchange has continued to harness this success, which is highlighted by milestones similar to last week’s enormous announcement. They announced a new partnership with MasterCard to create a product called MasterCard B2B Hub, a new round of funding by way of a $300M investment, and an addition of over 600 new jobs by the end of 2018.
Achieving milestones like this are fantastic, but to Elmore, there is more work to be done – “In the immediate future we have to absorb that investment, invest it wisely, and start executing on the partnership.”
Despite this growth, AvidXchange has preserved that original startup culture. The walls of the lobby in their new building are constant reminders to never stray far from that entrepreneurial spirit. Elmore mentions, “One of the things that keep our culture startup and fresh is that we have enormously high goals. And when you have incredibly high goals, you attract people who are willing to attack those and they typically have the startup mentality.”
Elmore cares about the local startup community, he’s a teacher at UNCC, and recently was named an entrepreneur-in-residence at the Charlotte Chamber of Commerce. “One of the things that we’re exploring is ‘why aren’t there more Avid’s in Charlotte?’ He sees it as there should be ten to twelve more AvidXchange’s. His role is to help the Chamber identify why this is the case. He adds, “There is nothing broken and there’s nothing that needs to be fixed about the Charlotte entrepreneurial ecosystem.” But the main focus of the Chamber effort is around fostering the ecosystem. We need to nurture the ecosystem to where more startups blossom into main street companies and then main street companies turn into fast-growth corporations.
Outside of his work at AvidXchange and the Chamber, Elmore is engaged in mentoring people interested in starting their own entrepreneurial journey. He’s passionate about changing the common thinking of – ‘I have an idea, it’s the best idea ever, and I need to raise money for it’. He wants the people with the ‘best idea ever’ to first consider bootstrapping. The priority needs to shift to signing customers over raising money.
Concerning bootstrapping, one of the most important variables to a company is cost of living, and Charlotte’s cost of living is a significant benefit. From that regard, more innovators and entrepreneurs should consider starting in Charlotte. In Elmore’s prospective “[Charlotte] is the best place in the entire country to bootstrap a technology company – period.”
