From Failure to $2 Billion: The Unconventional Blueprint That Transformed a Startup

Francis Pedraza’s first startup failed due to a lack of a solid business model, despite having high-profile investors and putting in hard work. This humbling experience led him to carefully design the models for his next ventures: Invisible Technologies, which is disrupting the traditional SaaS subscription model, and Infinity Constellation, described as the first artificial intelligence (AI) services holding company.

At a Your Next Move event presented by Capital One Business, Pedraza discussed his journey from startup failure to building and running a $2 billion company with Inc. editor-in-chief Mike Hofman. Here are the key insights from their conversation.

Selling to Customers Is Easier Than Selling to Investors

Invisible Technologies, which made the Inc. 5000 in 2024 and recently raised $100 million to reach a valuation of over $2 billion, initially faced skepticism from investors. Pedraza pitched an end-to-end, customizable IT solution—comparing it to baking a cake rather than selling the ingredients for clients to bake their own. Customers loved this approach because they had complex, messy problems that existing apps couldn't solve. Pedraza noted, "We were the company saying, ‘We can handle your weird, messy complexity and we’ll figure it out.’"

In contrast, investors preferred subscription models with high gross margins from the start. Pedraza saw this as a "Silicon Valley blind spot" and an opportunity to pioneer a new model, though it required being incredibly capital efficient to gain a long head start.

Processes Need Humans

Invisible Technologies was launched to break down customer processes into small, manageable steps like Lego® blocks, integrating hundreds of third-party apps and layering them with in-house software to streamline systems. However, Pedraza realized that humans played a crucial role in automation gaps. The company built a global network of expert agents, now numbering around 20,000, to handle steps that couldn't be automated. Pedraza explained, "If third-party tools and our own engineering team couldn’t automate the Legos, we could put [another] human in to do that step and that would allow us to build an end solution."

High Revenue Concentration Needs Resources

Pedraza highlighted that his business experienced rapid growth since 2020 by focusing on major deals with a small number of clients. He isn't overly concerned about the lack of customer diversification but warns that high revenue concentration can consume all resources. "All of your energy in the company, all of your engineering resources, all of your operational resources are going into making magic happen for this one account," he said.

The key to balancing this with growth is relying less on acquiring new customers and more on referrals and deepening relationships with existing ones, as satisfied clients can drive expansion.

Make Smart Decisions About Where Funding Is Invested

Pedraza’s recent $100 million capital infusion came with favorable terms, but its success hinged on both investor contributions and the company’s strategic allocation of funds. Part of the investment was used to hire Matt Fitzpatrick, formerly of McKinsey’s Quantum Black Labs, as CEO. Prioritizing leadership over sales hires proved wise, bringing in valuable experience and avoiding costly mistakes. Pedraza emphasized, "It’s actually very hard to recover from an allocation mistake," noting that poor decisions can quickly burn through capital.