How AvidXchange’s Strategy Rhythm Sky Rocketed Them to $48 MM
The fast growing Charlotte-based YPO company, AvidXchange, has grown from $12 to $48 million in the past three years and is shaping the future of the electronic payment industry for the middle-market. A major part of the company’s success is attributed to discipline and a series of regular rhythms:
- A rhythm to work on growth strategies;
- A rhythm to plan what the business is going to do every quarter;
- And a rhythm of communication, making sure the work is done every week and every day.
The reason most companies struggle with developing new strategies is simple: they don’t spend enough time on them. They are too busy executing their current strategies to focus on what’s next. Strategies don’t birth themselves right when you need them. You need to work on your next growth strategy while you are executing on your current strategies.
This is one of the main reasons why AvidXchange has been so successful. They are committed to working on their future growth strategies before they are ready to execute. They set aside “Think” time every quarter to work on new growth strategies, even when their existing ones are working well.
AvidPay, a product that is a key component of the company’s future growth and a big part of how AvidXchange recently closed $225 million in financing, was a strategy they spent almost two years developing before deciding to execute. Chapter 2 of my book, Rhythm, discusses how to develop a Think Rhythm to work on your Winning Moves. AvidXchange used this same process to develop the Winning Move, AvidPay.
The executive team meets every quarter to spend two days working on their business and planning for the next quarter. They typically spend the first day working on their strategy, then the second day developing their quarterly 13-Week Race execution plan. They review all growth ideas, then prioritize and rank those ideas using the Winning Moves Tool. The Winning Moves are ranked based on the following criteria: 1.) Revenue Growth Opportunity and 2.) Ability to Execute.
When ranking Winning Moves, not only should you discuss the idea and opportunity, but also how it’s going to get done. Who’s going to do it? What resources will you need? How much will it cost? All of these factors should contribute to the ranking process. For AvidXchange and many of my clients, this process often raises new ideas and questions, which helps to refine the strategy over time.
Prioritizing AvidPay as the key Winning Move seemed natural as they ran this process. The true success, however, was not making this decision, but the decision to continue a rhythm to test and validate various assumptions about AvidPay. By testing, validating and adjusting, they have been able to improve their financial model by more than 10X.
They set up a weekly team meeting to focus on AvidPay, review and validate their assumptions using the method in Chapter 3 of Rhythm and the Winning Moves Planner. This weekly meeting may not have been as productive if they hadn’t set the tone and environment from the beginning. They set up an environment where people weren’t afraid to highlight issues and problems, where instead of laying blame they could focus on solutions. This environment helped them to stay future-focused in pushing AvidPay forward, learning from true market data, from real customers, and moving fast to improve all aspects: selling, implementation and customer service.
Even the product features evolved faster to take advantage of customer needs they did not know about until the product was launched and in the hands of real companies doing real payments. Here’s the “Aha.” Most companies think that their strategy time is over, and they move into execution. When in fact, AvidXchange demonstrated that by continuing with a Think Rhythm to validate assumptions, clearly document new assumptions and decide what to move forward with using this iterative approach, they became more agile and significantly improved their AvidPay growth strategy after the initial launch of the idea. At the point when most companies stop making progress on their strategy, AvidXchange made the most forward progress on their strategy. AvidPay’s current business model has 10X more revenue than the initial model when AvidPay was launched. 10X! That’s what many companies are missing without a powerful Think Rhythm that goes beyond the initial launch of their products and growth strategies.
AvidXchange continues their journey every quarter, every year. In fact, they've celebrated their 61st planning session and run their 61st 13-Week Race. The CEO, Michael Praeger, shared with me that every single breakthrough the company has ever had ties back to one of these 61 planning sessions and was executed in a 13-Week Race. Today, they continue not only to refine their strategies but also their process. They’ve expanded on this rhythm by adding a third day to their quarterly planning session to focus on developing high performance teams.
Photo: AvidXchange's CEO, Michael Praeger, speaking at the 2015 Breakthrough Conference