The Steady Climb of René Lacerte
Building Bill.com Into a $11 Billion Industry-Leading Company
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René Lacerte is an under-the-radar CEO who founded Bill.com in 2006 and built it into a public company valued at more than $11 billion.
In a 2021 interview with Jason Lemkin, Founder of SaaStr and a user of René’s product, Jason said, “I don’t know what we pay, but whatever it is, we don’t pay enough,“ and I think that perfectly illustrates how well René has solved a problem for SMBs.
But, this wasn’t René’s first company.
He climbed out of the lowest point in his career, at another company he previously founded, to build BILL into the incredible success it is today.
How’d he do it?
Let’s get to it.
René was born in Virginia but was raised in Winter Haven, Florida where his parents were running their own business.
He’s a 4th generation entrepreneur, with his great-grandfather operating a general store and his parents starting around half a dozen businesses between them.
Entrepreneurship has been in René’s blood from the very beginning.
Even the night he was born, his mom, who was a keypunch operator at the time (Oh how technology has evolved), was busy working at the time because he came two weeks early.
Dinners with his family growing up always involved talk about business, from product innovation to people management to the importance of cash flow.
René got what he calls his “Dinner table MBA” through those discussions.
These discussions would also later shape how he’d run his own company, just as the lessons he learned from the musical side of his dad would:
The dinner table discussions also gave René the desire to eventually build something of his own:
But René didn’t start his own company right away.
After getting a B.A. in economics and M.S. in industrial engineering at Stanford, he worked for PwC as an auditor for 3 years after a partner at the firm said he should go into accounting because it is the language of business.
He’d then spend a year working at his parent’s payroll company in Florida and join Intuit in 1994, helping them launch their payroll product.
This experience would lead to René starting his first company.
While working for Intuit, René had a great idea:
Put Quickbooks, Intuit’s accounting software, on the internet.
At the time, the only way to install the software was with a CD (Look it up, kids), but René thought there was a better way.
The only problem?
Intuit wasn’t… into it.
So, in 1999, at 32 years old, René decided to start a company, PayCycle, to do just that, providing online payroll for SMBs.
Working with his co-founder, Martin Gates, they bootstrapped PayCycle for about a year, then announced a $1.3 million round on September 27, 2000, from private investors.
When the time came to raise money from venture capitalists in the fall of 2000, they found themselves in a peculiar position.
The dot-com bubble had just burst and venture capitalists were cautious at best.
However, after talking with around 95 VCs, René was able to land an investor, David Hornik of August Capital, for an $8 million round of funding.
Over the next 5 years, PayCycle would go on to work with tens of thousands of businesses, grow to a team of more than 100, and become one of the top places to work in the bay area.
But it wasn’t all rosy for René.
In 2004, growth had slowed, they weren’t getting to a consensus on decisions, and so they worked with a consultant for 6 months to figure out the leadership roles at the company.
When René was called in for an unscheduled board meeting his wife, who is a venture capitalist, knew it wasn’t good.
At the meeting, the board asked him to step down as CEO, but René, heeding the warning from his wife, came prepared with all the ways he had failed as a leader and what he could do to improve.
The board wasn’t expecting this.
They talked about it for 30 minutes but still decided that it’d be best for René to step down from his role.
Later on, René would describe this as the lowest point in his career.
But he owned his mistakes:
So he moved into the CFO role for about 18 months, hired and trained the new CEO, and started thinking about the things he’d do differently with his next company.
One of his realizations was that the buck stops with the CEO. There needs to be one decision-maker. No more consensus decision-making.
The other was that he needed to be more willing to have hard conversations. There wasn’t much employee transition at PayCycle, he really never asked someone to leave in the 7 years he was there, and he admits this was a mistake on his part.
In 2006, he left PayCycle but stayed on the board.
It was time to start a new company.
And this time, he’d do things differently.
Frustrations René experienced while running PayCycle led him to start what would become BILL.
In an interview he did in December 2014, he talked about this:
Initially, the company was called Cashview.
But when the opportunity came up to buy a four-letter domain name, René couldn’t pass it up.
Here’s how he got it:
He reportedly ended up paying $200,000 for the domain name.
After funding the company on his own for about the first year, everyone who put money into PayCycle also ended up putting money into BILL.
René had maintained good relationships along the way with all the board members from PayCycle and he was very direct about the things he’d do differently this time around as a leader.
It just goes to show the value of playing the long game and building strong relationships.
And, one of the things René did differently this time was that he hired a coach. He was serious about improving and didn’t just talk about it, he put it into action.
Starting a new company also gave René a chance to build the culture from scratch, with five things, in particular, he thinks make a great team:
Dedication (To each other and their customers)
Authenticity (Really important, because when people are authentic, they’re at their best)
In September 2006, René officially started BILL, but he wouldn’t fully launch the platform until January 2008.
He was working on the prototype during that time, building out a lot of the structure of the platform, making sure it worked and could scale, and he had some good advice about this for other founders:
After the platform was built, René knew he had something after he showed it to his dad in March 2008 and he reacted with a four-letter expletive and “I can’t believe you came up with this.”
He was very impressed by what René had built, at a time when he had maybe 3 customers on the platform.
Sadly, in September 2008, René’s dad passed away from lung cancer.
René would continue to use the lessons he learned from his dad to build BILL, tapping into the network he had built throughout his career to get the first few customers.
He had gotten to know a lot of accountants through PayCycle and a number of them ended up using the platform.
And from day one, they built the platform to help all SMBs, so the accountants would end up being a massive part of their customer acquisition strategy.
After the accountants, they’d eventually get the banks on board, but this took quite some time.
It wasn’t until they had about 10,000 customers that they landed their first bank partnership.
The pitch to banks for René was simple: Let’s talk about how many business customers are choosing your applications today and compare that to consumer adoption with BILL.
Customers were clearly choosing what René and the team had built at BILL.
Yes, the platform itself was great, but over time they’d also become known for having amazing customer support, something René had learned the importance of growing up surrounded by entrepreneurs.
When it came to customer support, he looks at this as an opportunity to learn:
And, while they had phone call support at PayCycle, René opted for chat support at Bill.com.
For two reasons:
They’re able to document the questions customers are asking
Customers have a history they’re able to view
Managers can also review these chats so they can improve, and further increase the learning cycle.
However, at this point in our story, just like with his last company, René had to go through another difficult macro environment - the financial crisis.
Financial Crisis & Early Growth
In the fall of 2008, Sequoia put out their “RIP Good Times” spiral of death deck, warning that winter was coming.
Around this time, René had to make a difficult decision.
He had enough cash to last the company through around March or April of 2009 but knew it was going to be challenging to raise capital.
So he decided to lay off 40% of his team, going from 26 to 15 employees.
It was the right move.
He wasn’t able to raise money again until September 2009 and his runway would’ve come up short months before he was able to raise.
Side note, that same year, PayCycle sold to Intuit for $170 million, with René still an active board member at the time.
After that year, raising capital would be much easier, not just because of the macro environment, but because of what René had built.
As René said in an interview with SaaStr:
It took time to get customers across and they did so by making it as easy as possible for them.
They allowed companies to start with a fax or an actual check, but they incentivized them to pay electronically.
The cost of any paper transactions was $1.49 while electronic ones were $0.49.
They also made it easy for those accountants or anyone else on the platform to invite people to pay or get paid on it.
By around late 2009 or early 2010, René recalls Bill.com getting their first 1,000 customers and then strategizing more at that point about what’s next, the allocation of resources, partnerships, and sales.
A few years later, by 2014, the cost of the platform ranged from $29/month to $79/month plus transaction fees, which customers were happy to pay because they were saving time, getting paid 2-3 times faster, and also saving money by using Bill.com.
At this point, René had also integrated Bill.com with a number of accounting systems, building a tool that worked alongside them:
All of this work, years of building relationships, forging partnerships, and creating a platform that could scale, would pay off in a big way.
René would say it took 10 years before they had meaningful revenue at BILL, which would put us around 2016 in this journey.
Well, certainly by 2017 things were humming along quite nicely, with $40 billion a year moving through the platform.
And their sweet spot for customers by this time?
Businesses with as little as a few hundred thousand in revenue up to about $50 million.
They’d have 2 million users on the platform by this point, with a percentage of those being paying customers.
The built-in virality that the platform has, with accountants bringing their clients on the platform and banks also bringing their customers on the platform, fueled their growth.
Remember though, this took time to get going, and René had an uncommon amount of patience:
Around this time, the average customer is paying about $100/month, with a 10-13 month payback period so BILL’s CAC is around $1,000 to $1,300.
René is leading a team of 225, mostly based in Palo Alto.
The next year, in 2018, they launched international payments and did $65 million in revenue, setting them up for a round of funding in April 2019 that valued Bill.com at more than $1 billion.
And they were just getting started.
After being valued at about $1 billion in early 2019, Bill.com went public in December 2019 at a price of $22 a share, valuing the company at $1.6 billion.
The stock got a bump of more than 60% on the first day of trading and ended up being the 2nd best bay area tech IPO of 2019.
In a SaaStr interview, René reflected on their inflection point soon after launching international payments and going public a year later:
BILL was started in 2006, didn’t launch international payments till 2018, and payments overall didn’t take off till after the IPO when they not only had international payments but also virtual card payments. Why?
A couple of reasons.
First, they had to build out the end-to-end platform. There was a lot of infrastructure they had to put in place.
Second, the regulatory and compliance aspect is daunting and takes time. Hell, René even said that around their Series D or E round of funding, one of their investors said they might not actually have all the regulatory stuff figured out.
They had to build all of this out on top of being able to handle fraud risk before they could really get things rolling.
But once they did?
Off to the races.
Two months after the IPO, Bill.com was valued at $4 billion. By that time, they had built out a network of 4,000 accounting firms, driving 45% of BILL’s revenue, and solidifying their partner-driven distribution model.
And René was running the show, as one of his investors recalled:
By September 2020, BILL had more than 100,000 companies making payments on their platform and, combining software subscriptions and transaction fees, they were making an average of $1,500 in revenue a year from each of them.
By November 2020, BILL had hired 100 employees since the start of COVID.
In an interview that month, René mentioned how his team is 35% white males and 45% female, and just how important it is to intentionally build a diverse team:
By the end of 2020, BILL was valued at $10 billion, up from the $1.6 billion valuation at the time of the IPO and the shares had gone from $22 a share to $126 a share.
A Forbes article at this time showcased just how good of a return this netted early investors:
Soon after this time period, BILL went on a spending spree.
In June of 2021, BILL completes the acquisition of Divvy, a leading spend management platform, for about $2.5 billion.
René mentioned how they’re always asking BILL customers what they need, spend management customers loved Divvy, and the move made sense to enhance the platform and fuel growth:
Then, in September of that year, they acquired Invoice2go, a leading mobile-first accounts receivable (AR) software provider, for $625 million.
By this point, BILL has 121,000 customers, way more than public SaaS companies typically have.
And their gross margins are growing:
They’re almost evenly split between payments and software revenue at this point and their average customer value is about $2,000 per year.
How are they finding them?
With a three-prong approach:
Direct through digital marketing and word of mouth
Accountants, accounting professionals, and bookkeepers
Strategic partners like banks
And René wasn’t done shopping yet.
In November 2022, BILL acquired Finmark, a financial planning software company for startups, for an undisclosed amount.
All of this leads us to today, in June of 2023.
René and Bill.com Today
What a journey it’s been for René, starting BILL in 2006 after being forced to step down at PayCycle and growing it into a company valued at $11 billion.
He went through the financial crisis right after launching, more recently has had to weather the tech stock crash of 2022, and yet he still has BILL positioned to succeed for years to come.
BILL has such a sticky product, with a clear network effect, and a number of key partnerships.
They’ve grown to become a leading company in the industry with thousands of employees.
It’s remarkable what René and the team have built.
When it comes to René, what I’m also impressed by is how he’s also made it a focus to take care of his health and encourages others to do so as well.
I don’t know what his current habits are, but in a 2017 interview, he mentioned how reading the book Younger Next Year influenced him, and at this point, he was playing ultimate frisbee every week, had healthy snacks available at the office, and was consistently running.
Another time he mentioned having a Peloton and constantly trying to beat his personal goals. And finally, in an older interview, he talked about running 35-40 miles per week back in 2014 with no headphones, just nature, as a form of meditation for him.
Take care of your health, so you can take care of everything else.
It’ll be fun to see where René can take BILL from here.
In each edition of the Just Go Grind newsletter, I like to include a few more quotes at the end from my research into the founder who is featured, sharing their wisdom.
On trusting your gut when hiring:
On the importance of your network:
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