Bill.com: A Slow and Steady Path to Fintech Success

The white-hot fintech market has been churning out multibillion-dollar companies at a prodigious rate. But not every success happens overnight.

Take Bill.com. The cloud-based business-to-business payments platform launched in 2006, only to be buffeted by the financial crisis. After some painful cuts, it launched on a path of steady growth built on the strength of its finance and accounting products for small- and medium-sized business. In 2019, it finally joined the ranks of public companies. Today it supports over 100,000 customers, and a market value of nearly $10 billion.

It’s a remarkable journey, filled with lessons, which founder and CEO René Lacerte shared during this year’s Commerce Summit, a fintech conference co-sponsored by Silicon Valley Bank and Commerce Ventures. In a wide-ranging conversation with Jane Atherton, managing director at investment firm Temasek, which in 2017 became one of Bill.com’s major backers, Lacerte talked about everything from the secrets of scaling a platform to hot topics like dual-class stocks (he’s against them) and SPACs (he preferred a traditional IPO).

There’s much in this conversation that took place in October of 2020, which we’ve edited for length and clarity.

Jane Atherton: Bill.com is clearly a huge success now, but didn’t happen overnight. What would you say was the greatest challenge you faced in building the business?

The greatest challenge was being a young startup during the financial crisis. The other challenge was a bit more personal. My dad died from lung cancer in September of 2008. By the time I read [Sequoia’s RIP Good Times deck] two weeks later, I made a decision to lay off 40 percent of the company. We were 26 employees, and we went down to 15. The board didn't ask me to do it, I just did it. If I didn't make that decision, the company would have run out of cash. The phrase "the buck stops here,” I internalized that as a leader in that moment. I was trying to raise money as fast as I could, and it wasn't going to happen.

What were the challenges of scaling Bill.com from a product and a platform perspective? And what guidance would you give to entrepreneurs that are going through the same challenge?

The first piece of guidance I would give is to always think as big as you can. Balance that with having to get something out the door today. I wanted to sell into the financial institution partner space when I started the company. Many had a specific desire for on-prem or private cloud [systems]. I wanted them to get onto the cloud platform that we had. But I knew I needed to have a solution for them. That balancing act between thinking ahead and delivering what you need to do now, that's the hard thing.

You recently went public. We've seen a lot of [dual class structures] in the IPO markets. How do you feel about that?

I'm against it. It's the investors’ job and responsibility to hold me accountable to do what I said I was going to do. If I don't, then they need to tell me. Nobody should think that they can do everything that happens in the life cycle of a business. I hope I can, and I work hard to make sure that I'm constantly growing and changing so that I can be a leader five years from now, 10 years from now. But if I'm not, I need people that I trust to say, "Hey Rene you're not doing the right job."

The reason dual class doesn't work is there's not enough accountability for me to step up and do the personal growth [I need to do].

Let’s talk about the IPO itself. There's lots of discussion in the marketplace right now around whether you should contemplate a traditional IPO versus a SPAC, versus a direct listing. Why did you decide on the traditional IPO?

We talked about the direct listing and there's definitely some appeal for it. But ultimately, I decided that it wasn't the right way to go. Having raised 14 rounds of capital across the last 20 years, [I understand] business is personal, and having investors that know me, that know the vision, that know the management team, creates an alignment opportunity for good times and bad times.

Getting out on the road and meeting investors in person helped me understand which ones I thought would be partners for a long time. It helped them understand values, alignment, the fit that we had.

Is there a big difference between being a private company CEO and a public company CEO?

Being public creates an awareness, a visibility that wasn't there before. I can attract different folks to the board, to the management team, to the company. There are changes in what I can say, and that forces the conversation to be more around the long-term vision. Digital transformation for the back office, that’s what I care about. I can talk about that until I'm blue in the face. I can't talk about my numbers, and that's okay.

What piece of advice would you give to founders, CEOs, on getting ready to go public apart from hiring a fabulous CFO like John Rettig?

I feel very fortunate to have started working with John for six years, so it's a real partnership. I would just say the CFO relationship is critical, and the alignment in how you think about the business is critical. It takes time for anybody to understand the business like the back of their hand.

You also need to have a great program manager internally who is driving the team. That's hard. You've got a company that's trying to deliver on all its deliverables, and now you got this whole new project which is probably the biggest thing the company's going to be doing. You can't talk about it in detail. Having a program manager who can quarterback all the things that need to happen across all the departments is critical.

Where do you see the business in 10 years? And where do you see the overall B2B payments market evolving and Bill.com's position within that?

We have 98,000 businesses on the platform today. There are six million businesses in the U.S. that have employees. That's a huge market that's still untapped. The vast majority of businesses still rely primarily on paper, the checkbook, to run their business. After COVID, businesses are going to want and need tools that allow them to work from anywhere. Having every document, every workspace, collaboration with your team or your customer or your vendor, so that you can be anywhere, is going to be an important part of how we conduct business. That's what we're focused on. The goal is to keep reinventing simplicity of the financial back office processes.