Flint's Blog

The Mystery of Patents

A patent used to be something to be proud of.  You work hard, invent something creative and new, and protect your invention with a patent so nobody could rip off your design.  Thomas Edison had over 2,000 patents granted to him to protect his inventions.  

We've done some amazing things at Billtrust over the last 11 years, but one of things we haven't done is try to patent anything.  I've always been a firm believer that vision and creativity are important, but execution is the name of the game.

So I was somewhat surprised to learn that on April 24th of this  year, I was awarded a patent.  Yay me! You can read about it here.  This is actually a patent that was filed for way back in 1999, when I was at Paytrust, and VCs were enamored with funding companies with I.P. ("intellectual property").  

This patent is a relatively new type of patent and it's not for an invention, but for a way of doing things - they're called Business Method Patents.  Business method patents are issued for lots of things, like one click purchase from Amazon. This certainly doesn't feel Edison worthy, but the rules are the rules. I personally think they're completely bogus but I'm starting to question my beliefs.  

One of the more repugnant types of business that are out there these days is the business of being a Patent Troll.  These companies buy Patents from others for the sole purpose of suing companies with deep pockets.  It's almost always cheaper to settle out of court so these companies make money with just the threat of a lawsuit.  They don't invent things.  They don't protect they're inventions.  They exist solely to sue others.  Gross.

Much has been written about patent reform, how we should do away with business method patents, but congress doesn't seem to want to do anything about it.  Brad Feld writes about it persuasively and often - see here.

It's gotten so ridiculous that companies now buy blocks of patents from others just so they can have something to defend themselves with in case they're sued.  AOL recently sold patents to Microsoft for $1.1 Billion dollars.  Perhaps the only smart thing AOL has done in the last 15 years.

I say it's broken.  The folks at Twitter think it's broken and have said they won't attack other companies with patents.  Just about everybody thinks the patent system is broken, except for the trolls.

Since I'm a "Fix the problem, not the blame" kind of a guy, let me propose a solution.  Let's "open source" our patents.  If enough people agree to share their patents for the sole purpose of providing defense against frivolous lawsuits, we might be on to something.  If Wikepedia can exist, this doesn't sound that hard.

I'll start. I hereby grant patent 8,165,958 to the common good.  Who else is with me?  

 

 

Great By Choice

Just finished the new Jim Collins book, Great By Choice, and it was a home run.  Collins is obviously a legendary business author so the bar was set high, and in my mind he cleared it easily.  In typical fashion, the book zeros in on a handful of companies that had great success. The difference this time was that these companies thrived in an extreme or uncertain environment.  He also does a masterful job of comparing them to some similar peer companies to try and demonstrate where the causality was, which is always tough.

Many great takeaways but I'll give you the two that really resonated with me:

Fire Bullets, and then Cannonballs - The premise here is that the best companies don't take more or less gambles than their competition, they are just more disciplined about the approach. They fire bullets at a variety of targets, and then they unleash their cannonballs on those that worked.  Think of Apple building one Apple Store in a controlled environment, getting it completely wrong, doing it again, and then launching it globally.

Return on Luck - I've always had a bit of pessimism about some business books when they write about companies that had great success without talking about luck.  Maybe they were just in the right place at the right time.  It doesn't take skill to win the lottery, just ask the Pet Rock guy.  Collins took this issue head on and actually researched how many luck events that companies had.  He statistically made the case that the number of good luck and bad luck events were about the same in peer companies, but what really was different, was what the great companies did with the luck events - or what he called return on luck.  Seems obvious in hindsight, but every once in a while a big opportunity lands in your lap, and how you capitalize on it can make all the difference.

A blog post certainly can't do this book justice.  If you're involved in business management, this book is a must read.

YACS - Invoice Central

Over the last ten years, Billtrust has been very successful in helping companies roll out what the industry calls "biller direct" electronic billing sites.  If you go directly to one of our customer's web sites, there will usually be a link to eBilling, which is powered by Billtrust.  It looks like the biller's web site, but it's managed and hosted by us.

This strategy has served us and our customers very well.  There are hundreds of thousands of businesses in North America and most need help navigating the world of eBilling.

Our success in building all of these eBilling sites has created a problem.  In one industry that we serve, wholesale distribution, we have hundreds of these "biller direct" eBilling sites.  The small businesses that go to these sites, are with increasing frequency going to multiple "biller direct" sites.  This is not an optimal experience (i.e. it sucks).  The small biz has to go to multiple sites, multiple passwords, enter payment information multiple times, etc.  It's not pretty.

Fortunately, the industry has a solution for this problem, and it's called the "consolidator" site.  A "consolidator" site is a third-party site, like a bank or portal, where a customer can sign up to receive and pay bills from multiple vendors.  Most experts agree that the "consolidator" solution is more desirable for the bill recipient than the "biller direct" solution because of simplicity and ease of use.  However, the real world doesn't always listen to experts and the market continues to be split.

The big problem with "consolidator" sites is content.  Content, in this world, are bills.  Getting lots of billers to agree on a standard to distribute bills and accept payments through third party sites has been impossible in the United States.  There's just too many competing agendas.

And it's not like people aren't trying.  CheckFree/Fiserv, FIS/Metavante,  and iPay/Jack Henry have been powering bank consolidator sites for many years.   Recent entries to the consolidator space include Manilla, Zumbox, Doxo, and Volly.  In fact, I co-founded a company called Paytrust 13 years ago to try and solve this problem for consumers.

What all of these vendors have in common, is a focus on billing to consumers, or B2C billing.  And there's been no one focused on billing to businesses, or B2B billing.  Until now.

Billtrust has been working stealthily for the last year on building the world's first Business Invoice Network and we're calling it Invoice Central.  Invoice Central is a consolidator site that is focused on the needs of businesses.  B2B billing is not as sexy as consumer billing, but it's much larger from a dollars perspective and far more complex.  The average small business receives 50 bills a month compared to a consumer who receives an average of 12.  

We're also in the enviable position of being one of the largest B2B billing service providers on the planet so we've got lots of content.  Approximately 75 billers have signed up as "charter" members and we expect many more to join.

We're not sure if we've hit the mark perfectly with the launch of Invoice Central.  But there is a big need in the B2B space and we're confident we will figure it out.

Flint

PS - In a nod to my inner geekness, YACS stands for....any guesses?

 

How fast is Too Fast?

I've been blogging for almost 4 years.  I started off strong, like most bloggers, with several posts per month. Over the last year or so, I've settled into a once or twice per month rhythm. This is my first post in over two months. Not because I don't have anything interesting to say (although that is always debatable), but because we've literally never been busier. We're so busy, that sometimes I worry we're moving too fast. Let me explain.

In September we turned ten years old and announced our first acquisition, a company called Invoice Connection. Most people understand that the hard work with acquisitions occurs after the deal closes. You've got people, products, customers, facilities, all that need attention. We had a plan and we've been executing on it. So far I'd probably give us a B+ on our efforts.  

In the fourth quarter, we've continued with our aggressive expansion efforts. We've announced new partnerships, signed dozens of new customers, and continue to grow aggressively. Just last week we moved into a new corporate headquarters (picture below, ain't she pretty?), launched a new product called Invoice Central, and biggest of all, closed on a second aquisition/merger that we will soon be announcing publicly.

All of this brings me to the title of this Blog post and something that I worry about a lot - "How fast is Too Fast?" Are we trying to do much? Are we stretching our organization too thin?

I've shared this concern with several people that I trust. Our VP of Sales/Marketing worries that we're not moving fast enough. Well he's just a sales guy (Oh snap!), what does he know? A long time friend and successful business person told me that we should always move just as fast as we can.  Well that sounds good but what does it really mean?  I spoke to a member of our Board of Directors and his quote was something to the effect "That's why you're paid to be the CEO, to figure these tough things out."

I believe there are no easy answers to the question of "How fast is Too Fast?" However, there are a lot of useful questions that we've asked to help figure it out.

• How fast is the competition growing?  (This should be the bare minimum threshold for growth if you want to be the market leader)
• How fast are the industry leaders growing in other market segments that are comparable to our business? 
• Is customer satisfaction steady or increasing?  
• Is product quality high?
• Are people getting burned out?
• Are dates being hit?
• Do you have the right team in place?
• Are your internal systems keeping up?
• What's the ultimate goal?  Slow and steady growth, life style business, IPO?

Billtrust has grown to be a very successful organization and how successful we become really comes down to balancing "How fast is too fast?"  As of now, it's full steam ahead.  We've got grand ambitions, and now is not the time to pause.

 

 

Biltrust Chapter 3 Begins

Below is an email that I recently sent out to our entire company.  Since a lot of our customers and partners read this blog, this may be interesting for you.

Billtrust recently turned ten years old.  Not only was this a big event, it also marked the beginning of the next chapter in Billtrust’s path to greatness.  Let me explain.

Chapter 1 was the beginning.  The company officially was founded in September of 2001.  There were a million things to do - create a business model, write a lot of code, land some customers, and build a core team.  We made a ton of mistakes but also made some incredibly great decisions, the best of which was to create a value system that focused on the customer.  Solving all of a customer's billing problems, framing all questions around “What would the customer want?”  We were small, our processes were ad hoc, and communication was easy, you just hollered out in the office.

Chapter 2 began in October 2006 when we raised our first, and only, round of venture capital.  Stuff that worked in chapter 1 wasn’t going to work in chapter 2.  We needed more processes, more discipline, and more automation.  We rounded out the executive team, opened new processing facilities, released new versions of our products, and started landing showcase clients like Kraft Foods. These were some great accomplishments that we are proud of.  But this chapter is now over.

Chapter 3 officially began on September 1, 2011.  Not because we turned ten, but because we closed our first of what we hope to be many acquisitions.  Our organization is growing at an astounding clip, we’re moving to shiny new offices, we’re doing acquisitions, and we’re partnering with some of the largest financial service companies in the world.  What worked in Chapter 2 is not going to work in Chapter 3.  We need to become more creative about solving problems, we need to find better ways to communicate with each other, we need to be more creative about how we drive sales, build products, and make decisions.  We need to stop making silly mistakes that aggravate customers.

This is what all great companies do.  They recognize that as they mature, their people and processes need to mature as well.  

You’ll be seeing a variety of changes over the next few months.  We’ll be doing more company meetings to try and improve communication.  We’ll be formulating our values so that new hires can understand better what makes us tick. We’ve hired a VP of Quality to focus companywide on getting things done correctly each and every time.

In each chapter of our evolution, leaders emerge to propel us to the next stage.  They’re not appointed.  It’s not predetermined.  They are people like Sunny D’Souza who has his basement destroyed by a flood but gets on a plane to California because he knows our first acquisition is critically important.  They are people like Dan Nies who exceeds his quota in the first half of the year but is still working his ass off because he feels like the previous year was subpar and he wants to make up for it.  There are dozens of stories like this.  These individual stories make up the fabric of what makes Billtrust great.

I’m not sure which leaders will emerge in Chapter 3.  What I do know is we need to improve in just about every area.  How do we get customers live faster?  How do we improve eAdoption?  How do we reduce our cost per envelope?

We need everybody focused and working hard on the mission to be successful.  But we also need the next generation of leaders to emerge to solve this new set of problems. 

I look forward to the challenges ahead not with fear, but with excitement. After all, We’re Billtrust, we can do anything.

Billtrust Chapter 3 has officially begun and we're pretty excited about it.  

Why We Bought Invoice Connection

Today we announced the acquisition of Invoice Connection (press release here), a competitor in the outsourced billing space.  Billtrust and Invoice Connection have been competitors for several years. Despite the rivalry, there has always been a mutual respect for each other.  We felt that the combination of our companies made strategic sense.  More specifically, here's some of our thinking.

1. If I were to ask you "Who are the nationwide powerhouses are in the payroll space?" you would likely say ADP or Paychex.  If I were to ask you the same question but substitute in "the billing space" you would have trouble coming up with an answer. Our vision for Billtrust is to become the nationwide powerhouse in billing solutions and acquisitions like this get us closer to our goal.
   
    
2. Billtrust is the number one provider of billing services in the wholesale distribution space. Invoice Connection was number two.  Having a large number of customers in an industry allows us even more opportunity to provide our customers with exciting new products and services.  We have an exciting new product that we’ll be announcing early next year that we think will be a big hit with our wholesale distribution customers (consider this the first initial tease of things to come).
   
   

Unfortunately, as most people know, most mergers fail (see here).  We go into this knowing we have to perform exceptionally well to make this a success.  We need to go the extra mile for all of our new customers but also continue to perform at a very high level for our existing customers.  We’re confident that we can do this.

 

Taking Risks

Life is often about managing risk. Which college to go to, what job to take, when to sell a stock, how much exercising to do, how often to "forget to take the garbage out" before getting in trouble with the missus.

I often get asked about the risks involved in starting a company. Billtrust is the second company I have been involved in as a founder so I have some opinions on the subject. For me, each action is a calculated gamble. How likely is something to turn out the way I expect versus what is the downside if things don't work out as expected? I'd like to say I think through all big decisions with a fair amount of rigor but that's not always true. Some decisions you just know.

Starting Billtrust in my mind was actually a low risk proposition. For those that don't know us, Billtrust helps businesses migrate their customers from expensive paper billing to efficient electronic billing and payment. Starting a company can involve a host of risks from hiring the right people, to developing great software, to not running out of money, etc. I consider these the Execution Risks and while they're incredibly important, they don't keep me awake at night because they are in my control. The risks I really worry about are the Vision Risks - where is the market going and can we as a company help get them there. From this perspective, Billtrust was actually pretty low risk. 

It was pretty obvious when I started Billtrust that the world was moving to electronic billing. It was also pretty obvious, at least to me, that businesses were going to need help getting there because electronic billing is a complex area with numerous standards, competing interests, and an ever changing landscape. So the only really tough question was what business model would work and for that we simply adopted the Payroll model. ADP and Paychex provide all services related to payroll and it's the rare company that tries to tackle payroll themselves. Billtrust set out to be the "one throat to choke" related to billing.with the goal of having companies think twice before considering an alternative approach. With the vision clear, it then becomes an execution game. 

This original vision set ten years ago still guides us as a company, but it is not incredibly unique anymore. So we as a company need to continue to take calculated risks that we think fit into our vision. In 2011, we're actually making several big bets as a company. We think we've got the vision part right, and now we just need to execute like crazy.

Congrats on the Award....Now Get Back To Work

It's award season again, and I was privileged to receive two great awards.  The IFO named me one of the Top 25 Most Influential Financial Operations Professionals and I'm also a finalist for E&Y's Entrepreneur of the Year in NJ.  Both are great awards.  While I will get the award, and it will make my Mom very proud, the credit really goes to the folks at Billtrust that make me look good.  Billtrust has accomplished a lot in ten years and it really truly is a team effort.

As I've blogged before, the awards a nice, but they're not the goal, they're just a brief stop on the journey.

Billtrust has so much more that we can be great at, that it sometimes feels like we're just getting started. I was reminded of this yesterday when I spent some time with a few Billtrust executives at a nearby public company.  It was like a slap upside the face.  This company has been around just a little big longer than us but is already 20 times our size.  Different market, different business model, but a number of similarites. Most encouraging for me was that the CEO is always pushing to get better.  Not a whole lot of basking in how great they are, no relaxing because of what they achieved, but a constant push to get better at what they do.

I attended a meeting this morning here at Billtrust on a topic we call eAdoption. This is how we help customers move their customers from paper billing to electronic billing and payment.  By any measure we're doing great.  Our customers love what we do, we're way ahead of industry benchmarks, and we have cutting edge technology.  My response - who cares?  Let's get better.  And I was brutally frank with my feedback.  Not to be a jerk (although some would interpret it that way), but because I view my job as the CEO to be the head challenger. As soon as we start spending time ruminating on how wonderful we are, is the same day that competition begins catching up.

So while the awards are nice, and it's always fun to pause and enjoy, don't pause for too long, because there's lots of work to do.

 

T. G. I. M.

We're doing a lot of interviewing lately, we always seem to be on the hunt for great talent in a number of areas.  There are so many schools of thought about how best to interview people that I've lost track.

After over 20 years of interviewing people for a wide variety of positions, there is one trait that I've found that predictably leads to star performers, those A players that you want in your organization that can elevate everybody.  

Sure we want smart people with great educations but that's not enough.  We want rich experiences in relevant fields, but that's also not a great indicator.  We want subject matter experts, but anybody can learn a subject.

What really sets apart the A players from the B players in my mind is T. G. I. M., which stands for Thank God It's Monday.  Is the candidate passionate about what they do?  Do they look forward to showing up every Monday morning and changing the world?  Or is this just another job?  

I ask a lot of random questions in the interview to see if people are genuine, if they can think on their feet. One of the most basic questions I ask everybody is "Why do you want to work here?"  You would think in this day and age that people would have a pretty good answer to that one. I actually had someone interviewing for a very senior position that answered with "because it's close to my house." Really? Of all the things that are important about your next career, you put commute time at the top?

I've read a few relevant blog plosts recently that make the case far more eloquently than I ever could.

Pursuing our Passion Blog has a great post on TGIM from last year.

Feld Thoughts is more geared towards those just entering the work force.

Both of these posts can sort of be summed up with - Find something that you can be passionate about and go embrace it.

I know that we can't hire all A players and that Billtrust isn't the right place for everybody, but my most important job is to hopefully create an environment that passionate individuals can thrive.

They Must Be Giving it Away!

If you think this picture looks strange, you're right, it does. It was 34 degrees yesterday in New Jersey, and there was a line outside of the local water ice place a mile long. 

Water ices, or italian ices, as they were called where I grew up, are frozen fruit treats that are a great on a hot summer day. But it's FREEZING in NJ, why are these people standing in line?

As you might have guessed, Rita's is the name of a big chain of Water Ice stores that each year has a special promotion to kick of the season. Free Water Ice for Everybody!

It's really a pretty ingenius marketing strategy. I drove by the place and stopped with my son. I actually ran into my wife there who had the same idea. Clearly it's a big customer draw as you can see from the picture above. Not only does this build brand awareness but also a ton of customer goodwill. Who wouldn't want to return to the nice folks that gave them free treats?

At Billtrust, we've experimented with the "give it away" strategy with mixed results. In the early days we tried a "free for three months" strategy that didn't amount to much. When companies make big business decisions about something that is core, a few months free doesn't get people excited. However, our Earth Day promotion has worked very well. Each year on Earth Day we offer clients a free insert for their bills to promote the benefits of electronic billing. Two big differences in these promotions. The first promotion was an offer to prospects (companies we were not doing business with), the second was to customers. The second big difference is that when you give away something for free, you've got to make it easy for the recipient to say Yes.  

We've all seen the infomercial gimmicks of try this product for free and we know there must be some catch. What's brilliant about Rita's promotion is that there are no strings attached, why wouldn't you want a free water ice?

So what's my new Spring resolution? Think about what else Billtrust can give away for free.