A Serial Entrepreneur’s Journey into FinTech: Felix Rodriguez, Founder and CEO of finally (Part 3)

Sramana Mitra: And in those four months, what kind of metrics did you have to show to be able to raise the series?

Felix Rodriguez: I’ll never forget how the numbers went. In the first month, our revenue was $4K. Then it was $16K, $40K, and then $80K. It was really a driver of if I spend more on ads, I’d get more customers. I was building a partner network to be able to convert those bookings into actual customers that actually use the service.

Sramana Mitra: This is happening in 2008?

Felix Rodriguez: That’s 2009.

Sramana Mitra: So it’s after the financial crisis,

Felix Rodriguez: Yeah, actually, it took three months to get the funding. So, we were doing this in 2008 during the crash and no investors were investing. I remember that.

Sramana Mitra: Right?

Felix Rodriguez: Right. That was rough. I was very fortunate because I think my prior history as a founder gave the VCs the conviction to go ahead and do that round. Plus the traction.

Sramana Mitra: Yeah. I think it’s the traction. The kind of traction that you’re describing is exceptional traction actually.

Felix Rodriguez: Yes. It was great. Unfortunately, the business didn’t work out, but I learned so much from it.

Sramana Mitra: Why didn’t it work out?

Felix Rodriguez: We got it to the point where we were generating about 300-400 new customers per day and over 70K customers in a year. It goes back to the segment that we picked. We ended up picking appliance repair and in the appliance repair business, someone comes to your house and maybe they’ll fix your Viking refrigerator or your Miele dishwasher. If they don’t, then the technician has to come back for new parts or refunds.

I would say that we did not see the best behavior from the partner SMB side. I’ll never forget one of the worst things that happened to us was, we would have partners that would tell us that the customer declined the estimate, but they would move forward. They were siphoning the customers on the side.

Sramana Mitra: Common in marketplace businesses.

Felix Rodriguez: For me, that was my first ever marketplace. So I think at our peak, we probably had a 70% completion rate of our appointments. We were certainly generating the demand, but not getting that completion rate to a high enough point made it hard.

That’s why, we picked car service. You pick them up, you drop them off. There’s no dispute. You delivered the product. You can happily charge that customer.

The other learning from that was, appliances might be something you might need every 3-4 years. So the recurring component, once you have a customer, is vital. With appliance repair, we didn’t have that recurring component. That caused a lot of the issues for us. The revenues were certainly there, but the completion rates were not.

I think that caused a problem for us, and it wasn’t the greatest of circumstances to keep it going.

Sramana Mitra: So, you shut it down.

Felix Rodriguez: Yes.

Sramana Mitra: So, this went on from what? 2009-10?

Felix Rodriguez: It was almost two and a half years.

Sramana Mitra: That’s almost 2011.

Felix Rodriguez: Yes, it was definitely 2011, maybe March or April.

Sramana Mitra: Do you learn a lot about various aspects of online business at this point? What did you do next?

Felix Rodriguez: I was thinking, “How could we potentially start one of these things using our own capital? This was going to be the very first time, not to say that I was never the first investor in everything I did, even if it was small initially. But my next business was something that we started ourselves.

I started it with my co-founder, Glennys. We had done several startups together. She also happens to be my better half. So, she’s been great from an operations standpoint. I couldn’t think of a better person to be the initial first person to get involved with. She’s been phenomenal.

I also had a good friend who at the time wasn’t doing anything. And I said to him, “Edwin, how would you like to do a startup with us? It’s very simple. We should all put down $30K-$50K and go do this.” He agreed and we ended up investing $100K altogether, plus some PayPal working capital loans.

The point is, the business grew to $6-$7 million in revenue and we only invested $100K.

Sramana Mitra: Tell me what that business was.

Felix Rodriguez: So, we went back into getting SMBs on the web with professional email. This time around, they wanted some micro apps, like some calendars and booking. Websites were starting to become more than a brochure. They were becoming ways of people generating revenue and booking meetings and getting appointments. So, we went back to that same concept where now there were more web apps. That really helped us grow and we bootstrapped it. We did that for almost five, six years.

To be honest with you, is it was painful because you’ve got to decide if it’s a lifestyle business or if you’re building something big. During the course of our journey there, I came across some great team members that as a bootstrapped company was going to be really hard for us to keep.

This is the biggest thing that people don’t understand. If you’re building a team and people are committing, you owe it to them. I think you owe it to everyone to be the biggest, best you can be.

I think if they’re planning on having kids and paying for college or getting a nice car or getting a nice house. Remember, your people are going to need these things and some of them may want them, some of them may not. So, if the company is too small, you may not be able to provide those avenues.

So that’s why, I now prefer getting all the resources I can from professional investors and then going out and building my team and making my team happy and successful in achieving their dreams. In return, our customers will get that same output from our team members. They’re going to build a great product and service our customers. They’re going to have some equity in it.

And you know what? We’re building something that everybody could potentially do very well in the future by being well-funded. And look, it’s fine to have a difference in opinion here, but across my nine to ten startups, for me, it’s definitely gotten better when I’ve had professional investors.

Sramana Mitra: So that’s one way of doing business. There’s nothing wrong with doing business that way, but people have different motivations and people do things with different motivations. For example, I’ll tell you about a segment of employees that don’t share your viewpoint that they need to buy a house and so forth. There are people who want to have the time to raise their children. For example, very often there’s a whole segment of people who need flexible work to be able to raise their children. They can be extremely talented people, extremely competent people, but they don’t want to work 16-hour days.

This is an example. There are many different types of people out there. So, you’ve been following my writing for a long time, the reason I have said what I’ve said all along to this industry is that you have to define what success means for you.

Success may mean making a lot of money and buying a very big house and living a very high burn rate life. Success may also mean having time in your hands to spend with your family. There are many different viewpoints and definitions of success. That definition of success varies.

There is a very common phenomenon in this high growth startup industry that people do not have successful family lives. It’s full of divorces. It’s full of unsuccessful family situations. And for a lot of people, that’s not success.

Felix Rodriguez: Yes, I agree with you 100%. I think the point that I want to make sure we don’t miss is that also not being properly financed offsets your balance in your life. If you think of it as a quadrant where you have work and then you have relationships, hobbies, or things you like to do, or religion.

What I’ve noticed is if you don’t have enough of the resources, it pulls from those because I’ve seen what’s happened to team members that say, “Look, I’m working fourteen hours or fifteen hours because we don’t have enough to get another person to fill this role.”

So, when you think about finally, our company, we do have some people that work more hours than our normal. I’m not going to say I’m not one of those people, but most people are able to have a steadier life with maybe 50-60 hours. I think it’s because we’re not trying to burn our employees out by making sure that we’re properly resourced.

There’s no way we could have a corporate card and be a FinTech lender and help SMBs get access to over a billion dollars in capital without funding.

This segment is part 3 in the series : A Serial Entrepreneur's Journey into FinTech: Felix Rodriguez, Founder and CEO of finally
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