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?  

 

 

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.

 

Go Visit Someone!

I'll admit it, I'm a slave to my laptop / iPad / SmartPhone.  I like to think of myself as pretty organized. I'm usually focused on the right task at the right time which is essential to staying on top of your game. Except when it isn't.  

What about the tasks and activities that never show up in your inbox or on your task list?  What about the things that you should be doing that you're not even aware of?  How do you know what you don't know?

Last week I attended an industry conference called the Council for Electronic Billing and Payment.  This is a show that I hadn't attended before and I had two primary reasons for going: first, it was a topic that our company is very interested in and second, it was in New Orleans in February.  

The show had a number of sessions on a variety of topics and it was informative, but nothing that I couldn't learn sitting at my desk in about half the time.  The real value was in the networking.  I met some competitors,  some partners, and some former coworkers from my Paytrust days.  I left with probably five to seven meaningful follow ups that if I sat at my desk, I wouldn't have had.

We've been on a big push recently with our team to visit with clients and prospects.  We frankly had become too dependent on webinars for selling and training.  They're easy to setup, convenient because there's no travel headaches, and very cost effective.  However, they're awful for building relationships. They're awful if you want to have a real conversation about what kind of pain someone is having. If you want to talk to someone, they're great; if you want to have a meaningful dialog, forget it.

So lesson learned, go visit someone, you never know what you'll learn. 

My Favorite Management Picture

Today I was walking through the hallway and overheard what I imagine is a very typical conversation in companies throughout the world - "The customer wants this done one way and we do it another way. We can't do what they want."  So I popped in the office and drew my favorite management picture (see below).

I've given this example to lots of people throughout my career and assumed that the individual would have seen it by now.  Much to my delight he had not, so we proceeded to my normal script:

"We can't do this specific thing the customer wants", he said.

So I drew a picture on the white board of one big circle, and one little circle, with two arrows going back and forth.  

I then asked him "What's this?"

He thought about it for a second and gave up.

I said "The big one is the Earth, the little one is the Moon.  These two arrows represent that we have figured out a way to get people back and forth which seems like a pretty hard problem.  I'm guessing we should be able to figure out this problem out as well."

I know it's a silly example, but it's true.  Problems don't seem so hard if you assume most can be solved.  The old "Can Do" attitude is still relevant in 2011.

We then talked through the specific issue, and sure enough there was a solution.

 

 

Throwing Out The Roadmap

I read an article recently where Eric Schmidt, the CEO of Google, was discussing the history of Google and how some of the great products they launched were the result of "a few developers just banging something out in a few weeks".  He also said, that those days were over.  That Google had gotten too big for that to work any longer. That was somewhat depressing to me.  Sort of like throwing in the towel on just getting things done quickly.

As our company Billtrust continues to grow, we struggle with that as well.  Certainly, not on the magnitude that Google does, but I can feel it creeping in.  In the beginning, I would sit down with our CTO, Jim Eichmann, and we would basically split up the work and say what is the most important things we should be building right now.  Long term planning was not even discussed, we didn't even know if we would be around long term.  Then we started hiring developers, and we added them to the mix of what's the most important thing they should be working on.

But as you continue to grow, you start to think longer term.  You have product roadmaps.  You have customer advisory councils.  You make contractual commitments to customers.  And while you're working on important things, you really lose the ability to do quick trajectory changes to get projects done.  

I think to keep things exciting for your team, you occasionally just need to give them some latitude to "go off the roadmap" every once in a while.  A product roadmap, for those that don't know, is simply a schedule of new products, or new product releases, that are planned for the next 6 to 60 months.  Bigger companies need to plan for longer periods of time because resource allocation is incredibly complex, customers need to know, and sales people need to know what they're selling.

But sometimes things come up, that you deep down know are a good idea, that just need to get done.  We were having a conference call last week with our Customer Advisory Council, a group of 8 influential customers that help guide our product roadmap.  One of our customers was asking about when we were going to build an online user forum because the exchange of ideas between customers on the Council has been awesome.  We hemmed and hawed, talked about out plans to build into a future version of one of our products, but gave them no firm commitment since it wasn't within the next 12 months on our product roadmap.  Then one of our customers said "Why don't you just used LinkedIn?"

This was so blindingly obvious the right way to go, that we just had to do it.  It's not going to be exactly what we want because it won't be integrated into our product suite, but who cares.  We can roll it out in like 10 minutes and start giving customers value.  So the hell with the roadmap.  So two days later we went live with the new LinkedIn Billtrust User Forum.  If you're a customer of Billtrust, you can access it by Clicking Here.

The User Forum wasn't on our short term road map but sometimes you just have to throw out the roadmap and do the right thing.

Educated Buyers and the Last 10%

Seth Godin had a great post today about what really separates great solutions from good solutions.  He calls it the last 10%.  The basic takeaway is the first 90% of designing a web page, baking a cake, building a software solution is the easy part.  It's the last 10% that is really hard that separates the good from the great. 

The problem in our business, is that unless you've got an educated buyer, they never really understand what a great solution should be and why they might need it.

For example, Billtrust sells an email billing solution.  The uneducated buyer says, "I don't need your email billing solution, my Oracle system sends out invoices via email for free."  

The first 90% of building an email billing system is actually pretty easy, and most ERP systems and most of our competitors do this.

1. An email bill should look identical to a printed bill, preferably in PDF format
2. If multiple bills are sent in the same day, don't send multiple emails, send one email with one PDF file because customers still like to print them.

You'd be surprised how many systems can't do the above.  Our first version of email billing did just this and it was modest success.  And then we learned that it wasn't nearly enough to satisfy the market.  So we added the last 10%.

1. The body of the email should contain a customizable summary of the invoices included in the attachment.
2. There should be an option for customers to get individual PDFs because they like to import them directly into their archive system.
3. Managing the deliverability is essential through staying on white lists and off of black lists.
4. Making sure the email is branded as a customer communication and not a Billtrust communication.
5. Including a separate file along with the PDF so that the customer can import data directly into their accounting package.
6. Providing marketing opportunities in the body of the email.

This stuff may not sound important, but when you've got real clients counting on your solution, this stuff will kill you.

Billtrust likes to think we go the extra 10% to deliver a great solution to the market.  Our growth numbers certainly back this up.  But it still drives me crazy when we have a buyer who issues an RFP that simply says "How much for XXX?"  They're not willing to become educated to even learn the right questions to ask!

I Hate To Lose

I hate to lose.  Whether it's basketball, Scrabble, or especially in business; I detest it.  I'll let my kids win sometimes, but other than that, it's game on.  Sometimes I let my competitiveness get the better of me, when winning might not be so important.  However, I firmly believe that hating to lose drives business success.  You compete better, you learn from mistakes, you do what it takes to win at business.

You know what's even worse than losing, losing for a bad reason - like the time my brother Seth called a bogus offensive foul call in a game of one-on-one basketball when we were in high school.  Who calls offensive fouls in pickup basketball?  You want to call offensive fouls, go be a referee.

Recently, Billtrust competed for some new business at a large manufacturer.  These are ideals clients for us because we have a great business-to-business solution, awesome references, and a fair price.  The way we typically present our solution is to talk first about our paper billing solution and then close with our electronic billing solution.  This is where the world is today, this is where it's going, and here is how we will help you get there!

From the outset, I should have known we were in trouble.  Every question seemed to be about the cost of mailing a paper bill.  How much is one invoice, multiple invoices, cost of the envelope, etc?  While these are important questions, almost all vendors in our industry have the same cost structure so these numbers don't vary by that much.  We tried to stress with the prospect that our solution allows you to have zero cost in mailing a paper bill because we help migrate customers to electronic billing. So what they should really be focusing on is the total cost of the solution, not just one or two line items.  Normally I would be concerned that we didn't do a good enough job explaining or positioning, but in this case they just didn't get it.

We lost the deal, which doesn't happen often, for bad reasons.  I know deep down that I need to accept some losses occasionally, but it still pisses me off.

It Doesn't Matter How Fast You're Going if You're Headed in the Wrong Direction

About three months ago, a good friend of mine named Gregg convinced me to donate invest a very small amount with him, and several others, in some horses.  I know next to nothing about horses but thought it could be fun.  I've been to Saratoga Race Track in upstate New York several times and always had a great time.  We wound up buying a 5% share of three different horses, all two years old, all ready to race - or so we were told.

After a summer of delays, excuses, and scratches; one of our horses, a filly named A Plus, was finally ready to race.  So my little brother and I took a trip up Belmont Racetrack on Long Island, not too far from my house.  We got there in plenty of time to get a hot tip from the parking attendant, re-learn the difference between an exacta, boxed exacta, and daily double; and to get our donations bets down on A Plus.  Believe it or not she was the favorite and running with just only 5 other horses so we actually had a reasonable chance.

We got to the rail right before post time, and since they were starting on the opposite side of the track, watched them begin to get the horses into the gate from some large TV displays on the track.  From somewhere in the crowd, I heard a yell  "Hey! Look! A horse is already running."  Immediately I knew this must be our horse. I looked up at the TV Display, and there was A Plus running full speed around the track, without her jockey that she somehow managed to dislodge at the gate.  As she rounded the bend, heading the wrong direction, I managed to snap the below picture as the crowd cheered her on.

After running completely around the track, they were finally able to calm A Plus down, who was then scratched from the race. What a bummer.  I immediately called my friend Gregg to convey the events that just had unfolded.  After convincing him that I wasn't BS'ing him, he had only question for me - "Well, was she fast?"

This happens in business all the time.  We're often in such a rush that we don't pick up our heads to make sure we're headed in the right direction.

When I started Billtrust back in 2001, I convinced myself that we were going to be the ultimate outsourced billing solution for the QuickBooks marketplace.  They had over 2 million customers, all of which would be candidates for our CompleteBilling service.  We developed an integrated QuickBooks offering to transmit invoices over the internet to our servers, built a web site to market the solution, and signed up for the QuickBooks marketplace to drive some customers.  After three months of hectic development, we launched our first version of CompleteBilling. 

Six months later we pulled the plug and stopped marketing to the QuickBooks audience.  It wound up that the QuickBooks customers just didn't have enough pain to justify going through an outsourcing decision.  We were moving so fast, and in such a rush to get a product to market; that we didn't do enough up front market research to validate that this was a problem worth solving.  Fortunately, we were able to reuse the majority of the technology we developed when we went after bigger clients. 

Funny thing though, a little while after we launched our offering, Intuit, the maker of QuickBooks, began offering a similar service to the market.  It took them about two years to shut it down for what I assume are the same reasons.

So two takeaway lessons from this:

1. It doesn't matter how fast you're going if you're headed in the wrong direction.

2. It's OK to fail, but if you do, make it fast, so that that you have ample time for recovery.

P.S. - Our horse A Plus is scheduled to race again this weekend. Hopefully the jockey can hang on this time.

Confirmation Bias

This weekend was my son's first Cub Scout Pinewood Derby.  He's six years old so I had the privilege of helping out with all the cutting, sanding, drilling, etc.  We decided that we would build a skateboard looking car that looked something like below, except red.

Our game plan was to cut the block into the skateboard shape, sand it, paint it, and then put on the wheels.  Seemed like a good plan.  Unfortunately, I'm more of a software guy than a hardware guy and the design had one big flaw.  I had cut the wheel axle thingys too narrow and when we tried to nail the wheels in, the wood exploded.  I then attempted to glue the wood back together by using some krazy glue and a clamp.  This worked wonderfully except for the fact that some of the glue leaked onto the axle and the wheel, which made the wheels all stick in place.  I had successfully created the first unmovable pinewood derby car.  Yikes, this wouldn't do!

In my neighborhood, when you have a tool problem, there's only one guy to call - Mark Huselid.  Mark is a professor at Rutgers, an international consultant, and most importantly for me and my son - a tool guy.  He's Tim Allen on Tool Time except he knows how to use all of his tools.  Anyway, he hooked us up instantly using his drill press to cut some new holes, a caliper to measure the width of the drill bit to use (so that's what that's for), special files, sand paper, levels, etc and voila, we were in business.

So where was I.  Oh yeah, the point of my post.  Mark mentioned to me a blog he reads by Bob Sutton, a Professor at Stanford and also an accomplished author.  He had a post last week entitled John F. Kennedy on Myths that has some absolutely great stuff in it including something called Confirmation Bias.  Confirmation bias is essentially hearing what you want to hear to confirm beliefs that you already have and ignoring contradictory information that might lead you to a different conclusion.  I see this happening with my managers, and especially myself, where we have a preconceived notion of the right strategy simply because we think it's right, without any hard facts backing it up.  Sometimes we might winding up being right.  However, acknowledging that there might some confirmation bias I believe will allow us to make much better decisions.

Meanwhile, back to the pinewood derby.  In the 30+ years since I was a cub scout, a lot has changed.  Some people take this very seriously.  There are some generally accepted principles for making a fast car.  It should be aerodynamic, the extra weight should be placed toward the rear of the car, and you need to make sure your axles are well lubricated and as straight as possible.  There were about 50 cars entered and they all pretty much conformed to these rules.  With one major exception. I'll call it the Monster Truck.  It was big, it was boxy, and all the Dads agreed this baby had no chance. An hour later, the Monster Truck finished in the top 10, easily beating many cars that had a "far better design".  How could this be?

To make a long story even longer, you guessed it, the answer is confirmation bias.  We all were told to make our cars aerodynamic and not knowing any better, we believed it based on information we read  and images of dragsters in our head. My guess, which I haven't confirmed, is that aerodynamics for a pinewood derby car have a near zero impact on the cars speed.  It's a small track, there's no wind, so the effect is negligible at most.

So if you've read this far, keep in mind, that maybe that decision you're about to make that you're so sure about could be influenced by confirmation bias.

The Awards are Nice but...

Over the last few days Billtrust received two awards recognizing some of our accomplishments.  The New Jersey Technology Council notified us that we were a finalist for Growth Company of the Year and Inc Magazine recognized us as number 800 on the Inc 5000 list of fastest growing companies in America.  Last year we were number 206 on the Inc 5000 list so appearing in back to back years is exciting for all of us at Billtrust.

These awards are great and certainly cause for celebration.  The Billtrust team has done an outstanding job executing upon our plan to be the best Billing Service Provider in the US.

However, I certainly didn't start Billtrust so that we could get awards.  I didn't start Billtrust for the hope of making money.  I didn't start Billtrust for the recognition.

I think the two most important things a business owner can do is create an environment where people enjoy coming to work and where they can make a difference.  I've been in jobs where you wake up in the morning and dread going to work.  I worked construction for a week during college and my sole responsibility was carrying 24 foot 2" x 12" boards up two flights of stairs.  All day, every day.  I would leave work with splinters in my shoulders with every part of my body aching.  I'm surprised I lasted a week.  I've also been in corporate positions where playing the political game was a big part of my responsibility.  The amount of hours expended making sure you were positioned well was mind boggling.

When I started Billtrust I wanted a company that I would enjoy working at, that others would want to work at, and where we all could make a difference.  The awards and accolades are nice, but when you spend half of your awake hours at a job, it's far more important that you're loving what you do.