A Serial Entrepreneur’s Journey into FinTech: Felix Rodriguez, Founder and CEO of finally (Part 4)

Sramana Mitra: What you’re talking about is there are certain categories of businesses that are not bootstrappable.

Felix Rodriguez: That’s right.

Sramana Mitra: Being a FinTech company as a lender is not necessarily a bootstrappable business.

That’s a different agenda. There are many bootstrap companies that are extremely cash rich and with wonderful lifestyles for their employees and so on. So your argument that ‘bootstrap businesses do not have the resources to provide their employees with a stable lifestyle’ is incorrect and not a valid argument.

This is a valid argument that a FinTech business that needs to lend money to SMBs is a very difficult to bootstrap business.

Felix Rodriguez: Yes, absolutely. I probably had five or six great team members that I could have kept and I’m proud of what they were able to do. I wasn’t able to keep them because we were bootstrapped.

Sramana Mitra: At that time.

Felix Rodriguez: Yes, at that time. Even though the company itself was a success, I have those five memories that I know if I had venture capital or something together, we would have been able to go further and longer.

Sramana Mitra: So obviously, there are trade-offs. What people you can hire as a bootstrap venture versus not, there are trade-offs.

All right, so let’s go back to your business. You’re selling to SMBs. You’re discovering they have different needs, apps. They want you to build apps and so on. Is this the same company that you’re doing right now as a FinTech lender?

Felix Rodriguez: No. That’s the one we bootstrapped. We did that for almost five and a half years. Around December 2018, I was getting an idea. It was almost around the holidays. I was thinking, “What’s the one thing we always had to have that was like a pain in the butt?” It was everything to do with books, finance, and accounting. You can’t get a loan, you can’t get investors, you can’t grow a business if you don’t have a grip on your finances.

So, I had this hunch that most SMBs are struggling with that because if you’re a lawyer or a dentist or you have your own advertising agency, you’re really good at those things related to that business, but you’re not necessarily good at the things in the back office.

So, we had this idea and it was the beginning of the year. I told my wife that I want to test this idea. I bought a domain name called Back Office, and I said I’m going to run some tests in January to see if people need this.

In January, I start running my tests and get a couple of customers to sign up. I was the first sales rep. I was the first guy talking to the customers. And after I got those customers, I said, “OK, now we’ve to figure out how we’re going to get their books in order.” Of course, we had a sense because we had done books for ourselves and we’ve had CFOs and VPs of finance. We learned a lot about how to do that at that scale because of those other startups and businesses.

I remember my co-founder Glennys told me, “Right now, take on only customers that use QuickBooks because that’s what I know how to work with.”

Then I remember getting a call from a customer that had Xero. I’m known to have an engineering mindset, but I’m still a sales guy. So, I sold a customer and she said to me, “Well, now you’re doing the work.”

Of course, this was great for the long-term opportunity of what we were building, but this customer was behind by a year. That meant I had to get this customer up to date and do the work in a system.

From doing that, I learned how repetitive it was. I immediately thought this is perfect for AI. This is the stuff that people are now talking about. So, at the end of 2018 to 2019, we were working on our first AI called Prometheus.

That’s Greek mythology. You know, Prometheus never went to sleep, never took vacation, and was never allowed to die. That’s almost like what you need to do do this repetitive manual work, because if you can’t do that work, who’s going to read any books and know where they’re at?

So I got to the point where I had the first version of Prometheus designed and I showed it to Glennys and I said, “Look at all that manual stuff you were doing, check this AI thing. Look at what it can do. It can do the same thing you were doing. It could do it much faster and it doesn’t get tired and it makes way less errors.”

The challenge for us was going to be data because at that time there were no LLM’s. There were no base models. AI was more like a myth. No one knew about it. But I said to her, “We’re on to something.”

At this time, we’ve already moved to Florida. There wasn’t any tech stuff in Florida. So I went back to my prior co-founder. I said to Edwin, who was our customer happiness officer, “You know, we had over a thousand customers. And I said to Edwin, “I’ve sold this now. We’ve got like over twenty customers. And Glennys has figured out how to, you know, on board the customers and get them set up.

And we built this platform. I told him from day one what the vision is. I said I feel we can build a place where businesses can get all the apps they need under one login, one UI, and it’ll help them run all their financial operations and a lot of it can be automated with AI. We’re now at a point where the validation for us is going and applying to an accelerator like 500 Startups or YC, and that only exists in California. And I said, we’re probably going to have to go out there, move out there and go through these accelerators, because at that time in 2019, there was no remote. They didn’t believe in that. It was like if we’re investing, you’re moving out.

So I said to him, “You’ve to take over sales. Glennys focuses on operations and I’ll go through the process to get us into one of these accelerators and raise some capital.” So I ended up raising some funds from friends and family. We ended up getting into 500 Startups.

We got in as part of Batch 24. We moved out to SF, lived there for about seven months. We also went through the program. It was a great experience. We met a lot of VCs. We met a lot of potential partners. 500 got our vision from day one.

At the time when we were going through 500, we’d 150-200 brilliant startup people, former founders, operators, and venture capitalists all in one office. We also had access to founders and CEOs and operators of other startups that were so many levels ahead. They have raised several rounds of funding, have reached certain milestones, and some were even public companies. We’d have these fireside chats and learn from them. It was an amazing experience.

For us, the idea was, what if we as soon as a transaction happens, meaning a card is swiped, we can automate that, we can automate the books for a business. That was the notion. What would it take to achieve that? The thoughts were, you have to become a bank or like a bank, and you have to become some kind of credit card because this is the way most companies pay for things.

So we had this idea of building a AI bookkeeping automation platform; we’re also going to become a checking account and a corporate card. 500 started connecting us with some of the folks that could help make that happen, like Visa and MasterCard. We started having those conversations very early on. The program wasn’t very long. It was for three months.

So demo day was happening in February. And as you can as you can imagine, going on stage in front of 800 people is nerve wracking if you haven’t done it before.

So for me, you know, I learned and practiced and worked on how to do that. But I was very fortunate. We’d raised our seed round before going on stage. We were the first company in the batch to have a signed term sheet and an investor that was going to lead our seed round. So I went on stage. It was the easiest thing in the world because I was already done.

This segment is part 4 in the series : A Serial Entrepreneur's Journey into FinTech: Felix Rodriguez, Founder and CEO of finally
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