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A New Type Of Unicorn-Entrepreneur With An Old Financing Model

Albert Santalo is a successful entrepreneur, having founded 3 software companies in South Florida. He was born in the United States to first-generation Cuban refugees and speaks of lessons learned from his parents sacrifices that taught him to make the most of the opportunity he was given growing up in a free country where he could pursue his dreams without fear. As Santalo puts it, “my parents left everything they had in their native country to escape oppression. They taught me to aim high because life is short and the opportunities I had were many.” To this end and from humble beginnings, he has worked hard to build multiple high-growth ventures when many entrepreneurs struggle to launch one. He has obtained venture capital for his Florida-based ventures from the nation’s top VCs based in Silicon Valley, when hardly anyone outside Silicon Valley gets venture capital from the region.

After working for Answerthink (now The Hackett Group – NASDAQ: HCKT), a management and technology consulting firm where he was one of the first team members and a director in the IT Transformation and Strategy Practice, he started Avisena, a financial and administrative software and services company, for physician practices. He co-founded the company in 2001, a month after 9-11 and a year after the Dot-Com bubble burst. He also had 4 young children at the time which made the move into entrepreneurship risky and nerve rattling. He was able to raise angel investment and then venture capital while growing the company in excess of 60% per year prior to its eventual purchase by a strategic acquirer.

He then founded CareCloud in 2009, at the trough of the 2008-2009 economic downturn, with a mission to build a financial, administrative and clinical core platform for healthcare in the cloud. He raised $8 million of angel investment between 2009 and 2010 to launch the firm. In 2011, he secured a $20 million Series-A led by Norwest and Intel Capital. He and his team grew the company in excess of 100% per year, processing billions of dollars in client revenue and millions of clinical transactions. CareCloud reached No. 127 on the 2014 Inc. 500 list of America’s Fastest Growing Companies. He stepped down from the day-to-day in 2016 and began working on his next venture.

In 2017 he founded 8base, a low-code development platform to help startup founders bring their digital products to life faster, better and more economically. 8base accelerates time to market but also helps founders build their product correctly and with scalability in mind, so they never need to suffer through the long and arduous process of rewriting and re-platforming their products. The venture is taking off and Santalo is on his way to building his next unicorn.

But here’s why Santalo is a new breed of unicorn-entrepreneur. For his latest venture, Santalo has moved from maximizing venture capital in his previous venture to minimizing venture capital in this new one. He is following in the footsteps of 76% of America’s billion-dollar entrepreneurs who avoided venture capital. Here are 10 lessons from Albert Santalo.

1. Embody and balance the three critical entrepreneurship skills: Santalo was trained as a computer engineer and later learned finance in his MBA classes. He learned sales when he started his first venture. These are the three skill sets common to most unicorn-entrepreneurs: technical skills in an emerging industry to build a compelling product; sales skills to find the initial customers; and, finance skills to keep the venture alive until it is able to generate cash flow.

2. Enter an emerging industry early, but not too early: Nearly every billion-dollar entrepreneur succeeded in an emerging industry or emerging trend. This includes the founders of Intel, Apple, Microsoft, Dell, eBay, Google, Facebook, Airbnb, Beyond Meat, etc. 8base competes in the emerging low-code development platforms industry, which is expected to grow from $3.5 billion in 2017 to nearly $52 billion by 2024.

3. To secure sales for a startup, keep tweaking your product and market to find the right fit: It’s incredibly rare for founders to find product-market fit on the first try. Most entrepreneurs iterate, sometimes for years, without every truly achieving it. Sam Walton (Walmart) found it by building big stores in small towns. Travis Kalanick (UBER) found it by switching from renting limos to allowing anyone to give rides to everyone. This is what Santalo did when he launched his companies. He stayed close to front-line customers to help understand what type of customer, under what conditions, will buy what he was selling 100% of the time. This is not a responsibility he delegated.

4. Be frugal until you find the right fit: No one has enough capital at the start. Neither did Santalo. He bootstrapped until he found the right fit, then invested in repeat sales and marketing to drive more leads.

5. Sell before marketing: Many entrepreneurs want to spend money on marketing because they are anxious to scale their companies and create an inbound funnel of leads. However, Santalo’s belief is that all great marketing efforts are based upon first achieving successful sales. Investing in marketing prior to this can lead to a lot of wasted capital. This has been the secret of about 80% of billion-dollar entrepreneurs.

6. Keep a foot in your local market and the other in Silicon Valley: For tech ventures, no place in the world rivals Silicon Valley. The best operators and investors have traditionally been based in the region. For this reason, Santalo has always kept in close contact with the Silicon Valley community, sought investment and advisors there, while adapting their playbook to his local market. “What works in the valley doesn’t necessarily work anywhere else. You must adapt it to your local reality,” says Santalo.

7. Think strategically – like a VC for revenue growth but like an entrepreneur to control costs: VCs focus on revenues and revenue growth rates. Without revenue growth, ventures do not command high multiples. The challenge is how do you grow fast without taking on large sums of investment. Santalo believes that product-led growth is his best tool for achieving this. Santalo and his team built their product so that customers can self-service into a free tier and then graduate into incremental pricing tiers. By eliminating sales and implementation friction, the venture can web scale over time.

8. Hire mission-driven teams and make everyone an owner: Startups can be both incredibly rewarding and gut-wrenchingly difficult for the team. It’s important to hire a team of resilient and mission-oriented staff while rewarding them through equity ownership for the sacrifices they make. Aligning employee and owner interests promoted effective work leading to rapid results.

9. Build products like an engineer but launch them like an entrepreneur – faith in yourself is your weapon: Engineers are trained to build products based on science – and do it with certainty. You don’t want a dam that breaks or an airplane that crashes. But entrepreneurs don’t have the luxury of building ventures with a fail-proof business plan. You need faith and a commitment to continuous improvement. Santalo learned that logic alone will not launch a tech venture. Faith in oneself, the team and the process are what makes crossing the chasm possible.

10. Venture capital is something you should bring on only when the venture is ready: For his latest venture, Santalo has used his own savings and raised money from angels and seed funds. He remains in control and feels that venture money is primarily growth capital he can access once the venture achieves escape velocity and he is in a position to secure the right investment from the right investors and under the right terms.

MY TAKE: There are common strategies used by billion-dollar entrepreneurs. If you want to build your unicorn, learn these strategies and the skills you need to implement them. Otherwise, you will waste time, money – both your own and others’, and your opportunity. Entrepreneurs like Santalo have learned these skills and strategies. You can too.

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Tags: bootstrapping, Entrepreneur, finance smart, Financing, Model, smart money, Type, unicorn, UnicornEntrepreneur, venture capital

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