Your Next Move - How Invisible Technologies Competes to Win in AI

Episode Date: November 4, 2025

Invisible Technologies has quietly become one of the most influential players in artificial intelligence—training 80 percent of the world’s large language models, raising $100 million in funding, and earning the No. 152 spot on the Inc. 5000. In this session, founder and CEO shares the bold strategy behind the company’s rapid ascent and his perspective on what’s next for AI, automation, and the businesses poised to lead the next wave of innovation.

With the VentureX business card from Capital One, you earn unlimited double miles on every purchase. Plus, the VentureX business card has no preset spending limit, so your purchasing power can adapt to meet your business needs. Capital One, what's in your wallet? I'm Sarah Lynch, and you are listening to Your Next Move, audio edition, produced by Inc. and Capital One business. In this episode, Editor-in-Chief Mike Hoffman interviews Francis Pedraza, on stage at this year's Inc. 5,000 conference in Phoenix, Arizona.

Francis is the founder and executive chairman of Invisible Technologies, an AI services company valued at over two billion dollars. He also founded Infinity Constellation, which he describes as the first AI holdings company. They discuss what really goes into building a high-growth company and how failure shaped Francis's approach to entrepreneurship. Here's that conversation. Well, I'm so excited for this conversation. Francis, thank you so much for being here. And we should give Francis a round of applause because he had a little bit of a flight delay. So this was a nail-biter to get here. So thank you for being here. So you have two companies. There's Invisible Technologies, which was the Inc. 5,000 company

last year, and that you recently raised $100 million for placing you at a $2 billion, over $2 billion valuation. So it's a unicorn as of this year. So congratulations for that. And you also recently launched Infinity Constellation, which you sort of bill as the first AI holding company. Do I have that right? Got it. All right. So let's start with Invisible Technologies. You launched in 2015. You were 26 years old. And this was actually your second company because your first one had not gone well. Yes, it failed. Yeah, yeah. So tell us about the failure story. I want to start with the fun stuff. I became an entrepreneur right out of college and I started one of the first mobile iPhone apps. It was called Everest. It was an iPhone app for achieving your personal goals. Think of it like

Instagram, but for your goals and journeys in life. And we didn't really have a business model. We were trying to scale it as a free social network. And so after about six months, we had a lot of churn, and we raised 2.6 million from great investors like Peter Thiel and Bono kept making the product better, but we're never able to make it work as a business. So it's a really humbling experience. I don't know how many people in the audience have failed in their career in a big, big way. I think the humility of the failure is one of the great teachers, and you know, you think that these things are terrible when they're happening to you, but you look back on them all these years later and you realize it was a gift. And so when you started Invisible,

what did you learn from the first experience that you sort of applied to the startup of the second one? How did it change the way you approach entrepreneurship? Have a business bottle. That's a good start. And so we thought a lot

about the business model from the beginning, and the business model has evolved tremendously over the last 10 years. So perhaps I can start by just talking about... Yeah, let's talk about Invisible.

So when we started the company 10 years ago, there was a founding question. And the question was, if there's an app for everything, why isn't everything perfect yet? If there's an app for everything, why isn't everything perfect yet?

At the time, my first company was an app and it failed, but I spent a year brainstorming with my friends, and most of the ideas we had to start new businesses were taking the form of apps. Like, why don't we start an app for this and an app for that? And at one moment, I took a step back and said,

why does the world need more apps? And I started to actually look into the history. So does anyone know who the first SaaS company was? If you know it, shout it out. Salesforce. Salesforce, 1999 was the first SaaS company. Before that, software was sold on CD-ROMs, and you'd pay for it once. After Salesforce, you'd pay for it every month via subscription.

So the business model was subscriptions, and the technology was software. For the last 25 years, every enterprise software company has been a SaaS company. And this has actually created a weird predicament for you as the customer. So if you want a cake, Silicon Valley will not sell you a cake. They will sell you tools to make the cake. They'll sell you apps, but then you have to make the cake on your own. And most enterprise customers don't have the internal engineering teams to stitch all these apps together into an end-to-end solution.

So they go to systems integrators like Accenture. And Accenture has like 70 billion of annual revenue and like a million employees worldwide. But they're not a tech company. So they tend to overcharge and under-deliver, but they will make you a cake. And they'll bill you by the hour, so they'll bill as many hours as possible without getting fired. And so I realized 10 years ago that this was like the blockbuster that we could Netflix. There was an opportunity to disrupt both traditional enterprise services and traditional enterprise software with a new business model. And that business model is now usually called AI services.

You've all heard of Palantir, yes. But 10 years ago, nobody had heard of Palantir. Palantir was not a public company. And so Invisible was kind of like an ugly duckling because we were an enterprise software company, but we were in a SaaS company. You can think of AI services companies like a triangle. You've got the horizontal platform,

which can do all these great things in theory, but you've got field engineers and field CTOs and a forward-deployed motion that goes inside the customer's company to solve all the messy problems, and they build the custom AI Apple. or the custom software application, they make the cake for you. And that ability to deliver an end-to-end solution

for customers is so much better than an app, and that was the original idea. But I'm curious, so you talked about how your first company didn't have a workable business model, your second company did, but it's also sort of like a new model that you were creating. And so how did you educate the customer base, the initial customer base, that this is something you really need? You know, it was actually always easy to sell the customers

and hard to sell the investors, which is a good sign. a good sign. If you're in a predicament like that, lean into it. So customers loved it because they had messy, messy problems and all these apps that weren't solving their problems. And, you know, can you help me solve the problems? And we were the company saying, yes, we can handle your weird, messy complexity and we'll figure it out. The investors, on the other hand, services was a dirty word. So they wanted nothing to do with services. The assumption was that, you know. They wanted a subscription. Yeah, they wanted to see a subscription. They wanted it to be, you know, know, almost 100% gross margins and just infinitely scalable from day one. That was what they

were comfortable with. And so I realized actually that that was like a dogma or a blind spot that wasn't just one investor, but like all of Silicon Valley had this blind spot. And that it actually created a huge opportunity for us because we would be the first. And we'd have a long, long, long, head start. But it meant that we had to be incredibly capital efficient. So have any of you entrepreneurs had to be extremely penny-pinching and capital efficient at any point in your business? Yeah, the bootstrappers are here. Yeah. And so you know necessity is the mother of invention. Like you end up getting really, really creative on all kinds of things. And so that's what happened with us in the earlier as the company. So you have the first five years kind of up

until COVID. And then COVID to now, that's when growth really accelerated. What was that like and what caused that change? Yeah. So we thought of the first version of our product as a digital assembly line. So it was a big build, and so I was very intimidated by my own vision for the company and wondering if it could even get done. But the original idea was we were going to break our customers' processes into little steps like Legos, integrate hundreds of third-party apps, all these software tools that exist, to do as many of them as possible, have our own engineering team build whatever they could on top. But to really build an end-to-end solution, you would have to have humans in the loop. And so we started building this global network of agents.

Today, we have 20,000 people in over 100 countries around the world, speakers of every language, PhDs, masters, experts in various subjects. So if third-party tools and our own engineering team couldn't automate the Lego, we could put a human in to do that step. And that would allow us to build an end-to-end solution. That took like five years to build, and our first customers were relatively small businesses, and then we started to build enough credibility and momentum

that we were able to support medium-sized companies. And then in COVID, we ended up digitizing restaurant menus all around the United States because all the on-demand food delivery apps basically needed to sell on these apps. So we were solving messy problems for those giants. And that was our first big break into the enterprise. And we experienced a pretty classic attack upmarket innovator's dilemma. If you haven't read Clayton Christensen's book, The Innovators Dilemma, it's one of our business Bibles and to just briefly describe what it feels like. In the early days of the company,

we were very excited if we can get a customer to pay $10,000 a month or you could call it $100,000 a year. But when we had our first customer pay a million dollars a year, after that, you only want to sell a million dollar a year deals. Even though in theory, 10, 100K deals equals $1 million deal, you end up re-engineering your whole company to do that bigger sell. and then that happens again when you do your first $10 million deal. You end up re-engineering, the way you market, the way you serve customers, everything goes towards doing that bigger deal. And so we just basically scaled almost like a kind of, you know,

a rocket ship from 2020 all the way through till now. But it sounds like you've also thought about, well, it's great to have those million-dollar deals, but I want to think about having a diversified customer base. And so, like, how do you sort of build that ethic into your business? So on diversification specifically, I actually got comfortable

with revenue concentration. It is a very uncomfortable thing. Have any of you a show of hands, like experience really high revenue concentration at any point in the company? It is not necessarily a sign that something's wrong. It could be a sign that something is very, very right, but it sort of sucks

up all the oxygen in the room. Because when you catch a tiger by the tail, so to speak, and you've got this, you're solving a big, meaningful problem for a big, meaningful customer, 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. So much so that it's almost like at some point you are blocked on the supply side, not on the demand side. In other words, if you're really making magic happen for a customer, what creates

victory or success is not necessarily selling more customers, but the credibility you have from that customer being willing to refer you to the next customer. So we scaled to 134 million of revenue last year with almost no sales and marketing motion. It was entirely driven by great engineering, great operations, the supply side. And so in those early years when we were scaling, we did have big customer concentration because we were focused on quality as the best business model, basically serving that one big customer that make a big bet on us. And then the second and the third and the fourth in any category. Yeah. So, you know, Inc. 5,000 companies get calls from private equity and other investors, you know, every day of the week. And AI companies, for sure,

are very hot, right? You recently raised $100 million, but you were very sort of intentional and strategic about how you raised the money and what you used it for. Can you talk about what that process was like? So have any of you ever turned down capital that was offered to you? It's a pretty empowering experience. Very smart folks up there. Yeah. Pretty empowering experience. So this was not the first opportunity we had to raise $100 million.

I remember at our company offsite in 2020, three, I in front of the whole company ripped up a $100 million term sheet from a tier one fund. Did people cheer or cry? It was such an emotional explosion. I mean, wait, did they cheer or cry? Both. I mean, that's a thing. It triggers both reactions almost simultaneously.

I almost felt like crying and cheering as well. So it turned out to be the right thing because the 100 million we did raise, we raised on great terms for the right reasons at the right time. By the way, some of this doesn't just have to do with the terms of the investor, the things external to the company. A lot of it has to do with the things internal to the company,

such as, do you know what you're going to do with the money? Oh, good question. What are you going to do with the money? Yeah. Yeah, so we hired Matt Fitzpatrick, who previously ran McKinsey's Quantum Black Labs, which, you know, outside of Palantir is probably the highest concentration

of field engineers and field TTOs that do these big custom enterprise, AI applications and software builds. And so we'll talk a little bit more about him in a minute, but the clarity he has brought to our product and engineering allocation committee meetings. So one of the main functions of a board of directors is allocating capital.

And the big question, when you're investing inside the company is we just raise the money, which of the many, many features that we want in the roadmap are we going to build? And how are we going to prioritize them? And how does that change the capabilities we can ultimately offer customers? Because the worst thing you could do is spend, you know, I don't know, $50 million on engineering and the customers ultimately shrug. And they can't tell that anything really happened.

You're just building for the sake of building. That would be one form of a disaster. The other form of allocation disaster is on go-to-market. So if you spend a ton of money hiring salespeople, and then the salespeople, ultimately, there's not real product market fit, they don't know how to sell it, they don't know who to target, they don't know how to pitch it, how to price it. You can burn a huge amount of capital really quickly, and this is very destructive. It's actually very hard to recover from an allocation mistake, and capital creates pressure.

So literally the clock starts ticking, the second you see. sign it and the money is wired, you are really under the gun. And so the tendency is to make a huge amount of mistakes immediately after you raise capital. And so the forbearance to actually enter an agnostic state of mind and to know when you do not know and to respect your own not knowing and to give yourself patience, even when the whole world is, you know, deploying capital like crazy. That is very hard. But it was actually the right thing in 2020. in 2024 when our competitors were raising hundreds of millions and then actually, you know, one competitor raised $1.8 billion and ended up with five times our revenue, but not a better

product. And that competitor ultimately had to be acquired because they'd raised so much capital, whereas we raised only $7 million and got to one-fifth their revenue with as good of a product. But now we're raising the capital because we have the agility and they're out of the market. And so that is the effect of corporate strategy over time. And it's a game that requires you to slow way down and read a few books, do a meditation retreat, talk to some really smart people, and think for a while. And so I'm glad we did that. We're going to take a quick break and be back with more from Mike's conversation with Francis Padraza.

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includes access to over 1,000 airport lounges. Just imagine where the VentureX business card from Capital One can take your business. Capital One, what's in your wallet? Terms and Conditions Apply. Find out more at Capital One.com slash VentureX business. So I have a book question coming up, but before I get to that, so you bring on Matt Fitzpatrick, who's now the CEO of the business, and you move into this executive chairman role.

How does that change your role within the business, how you spend your time? Like, what is that experience like? Well, I'm so happy not to be operating CEO because I respect what operating CEOs do. I'm guessing that many people in the audience are, you know, when we say entrepreneur, we often don't specify what your actual legal title and role is. And usually by default, you're the operating CEO. And it's the only person without a job description, right? Yeah. Because the job description is everything.

Yeah. And really, it's the E in CEO that is. so hard. It's the execution. And so I'm the chairman of the company now. I'm the president and chairman of the company. By the way, it's an interesting debate. Is founder a title? I don't even know if it is a state of mind. Illegal. Yeah, it's a state of mind. Yeah, yeah. We actually say at Invisible that the founding moment is always now. And I've always been quite liberal with telling people who've been at the company for enough years, hey, I see you as a co-founder. You know, you've been at the company for six years. Like, you built that product and you solved that problem at that key moment.

And so if you enter a state of mind in which the founding moment is always now, you know, deputize yourself with the founding badge, but don't delude yourself that it's somehow a functional title of a corporation. It's more of a state of mind. So the role of a chairman, I applied to break it into these four roles. Founder, president, chairman, CEO, what are these people doing? the CEO is running the company. And of the four, that is probably the most important. The founder is creating the idea and having the vision and has that kind of, it's almost like a spiritual, cultural, and creative role.

The president is flying around on planes and kissing babies and shaking hands and making sure everyone feels good and building relationships and doing business development and making it rain and hiring people and raising money and selling. And the chairman is sitting on the top of the mountain with the other people on the board of directors and making decisions about capital allocation, running the audit committee, making sure that we're making good decisions on hiring executives or we're making good decisions on the tech roadmap. It's oriented towards governance and strategy and capital allocation. So those are the four roles. And by the way, they can be held by

one person or multiple people. It's very much a wear many hats type of thing in the beginning. Over time, as the company matures, you end up sort of split. out the hats. And so, or even sharing the hats. So, for example, Matt, our CEO is definitely the strongest voice in our capital allocation committee meetings, even though I'm the chairman. And so we can chat more if it's of interest, but the way a board of directors works is a very weird and beautiful thing that is almost the opposite of the way most entrepreneurs naturally operate. Most entrepreneurs naturally cut through the bullshit, cut through the red tape, decision. One person is ultimately in charge, and that's you, the CEO, except the CEO is accountable

to the board, and the board is a committee. And so you have to ask yourself, are you a board atheist? You know, basically, do you believe that corporate structures are useless? And we, you know, we should un-invent the Delaware C corporation or the joint stock corporation? Or is there hidden virtue and hidden genius in the way that corporations are legally set up. And I think there is. I mean, there's certain decisions that ultimately should be made by one person and the CEO, and there's certain decisions that actually should be made by a group of people. Yeah. So you've mentioned atheism, agnosticism. I know you're interested in transcendentalism. You're a great reader. You referenced Clayton Christensen's seminal book, The Innovator's The Lema. Another book I know that's

really meaningful to you in the way that you think about your role is The Outsiders by William Thorndy. Can you talk about that book and what it meant to you as you sort of, of thought about both invisible technologies and this transition and then also infinity constellation? Yes, Outsiders is about capital allocation, and it's eight stories of eight different companies that outperform the S&P 500 by a ton. And that's literally the first page in the book is a graph of the S&P 500's performance over a more than 20-year period, and the graph of these eight companies versus that, and they crushed the benchmark. And none of those eight companies were technology companies. One of them, which you're all familiar,

with is Berkshire Hathaway. Another you're probably familiar with is Washington Post, and there were others. And what all these eight CEOs had in common was not necessarily that they were charismatic, but that they really thought about where each dollar goes in the business. So here are the eight options on the allocator's menu. You can keep a dollar in cash on your balance sheet. Keep it in cash. You can pay down debt. You can invest internally in the business. You can make an investment in another business. You can buy a business. You can buy back stock, and you can dividend. Those are the eight and the only eight options. And believe it or not, if you make decisions about where to put each incremental dollar very intelligently over

time, you can dramatically multiply the performance of your business. So you can almost realize that over decades, creating success in a company is really two different games. One game is building a really, really great product, service, business that customers love that is profitable and high margin and scalable, and that's the main game that most of us entrepreneurs are familiar with. But there's this second game that almost nobody talks about,

which is how capital allocation over time is a multiplier on success. And this was like an aha moment for me, and I realized that I just read a classic. And I reached out to Will Thorndack, I got introduced, he's alive, and he invested in the company, which was really crazy.

And one of the questions I asked him is why were none of the eight companies technology companies? said that I just don't think a lot of people in Silicon Valley have understood this, but there are a few who've really done it well. Like Jeff Bezos and Amazon really understood this well and did it well over time. It's just not in Silicon Valley though, exactly, right? Yeah, exactly. Seattle, yeah. So talk about Infinity Constellation and AI holding company. That is where a lot of your focus is, as you look, not one or two years down the road, but 10 years

down the road. What's your next move with that? So in this period where we didn't know what to do. We were scaling quickly. So we were at a, we entered 2023 at a 25 mil run rate. In one year, we scaled to 100 mil run rate. So we were scaling very quickly. So quickly, in fact, it didn't make sense to hire salespeople because we had revenue, you know, falling from the sky, so to speak, and it was really about doing it well. And also, the market was changing so quickly. It wasn't clear what technology to build. And we, we weren't high confidence enough other than to just scale what was working. So what do we do? We took five million. dollars out of the profits, out of the free cash flow of the business, and started an AI

services holding company. And the idea was that if Invisible was a golden egg, what about creating the goose that could lay other golden eggs? So if Salesforce was the first SaaS company in 1999, and Invisible and Palantir were like the first AI services companies in 2025, at the time was 2023, over the next 25 years, we felt there would be a lot of AI services companies. So if Invisible was counterposition against Accenture. That was the Netflix first blockbuster in our story. What about McKinsey, BN, BCG, EY, PWC, Deloitte, KPMG, InfoSysk, Cognosin, WPP, Omnicom Publacist?

We refer to them as the Galactic Empire. These are like 20th century traditional services companies, not technology companies. All of them are blockbusters waiting to be Netflixed. And we realize a whole generation of companies could go after that. And even as our enterprise value was skyrocketing, we had to shrink Invisible's focus. to focus on enterprise and public sector. And that focus resulted in invisible success, but it also meant that, like,

well, what about every other vertical? And so we built these eight companies that are now scaling quickly and above $10 million of annual revenue and going in a really great way. And each one of them has their own CEO, and they're all backed. There's only one investor, which is the Holdco,

and we give CEOs a path to 25% of their company, and we create 25% option pools for the team, and we provide all the capital, and at a billion dollars, if each of those companies gets to a billion, we'll still own half of it. And we spun it out this year as a separate company. And are you on the board of each of the whole? I'm the chairman of both companies, and they both have incredible CEOs. So Matt is the CEO of Invisible. And Brennan, who is Invisible's first enterprise client, is the CEO of Infinity Constellation. And they both have separate boards, great boards. Me and Charlie Songhurst are on

the board of both companies, so there's some continuity. And Invisible is the largest shareholder in infinity. So there is incredible alignment of incentives and network effects between the two, but there's an arm's length separation, so they're making their own decisions. I love it. Capital allocation is the skill that every founder needs to master. Well, Francis Padraza, founder and chairman, executive chairman of Invisible Technologies, and also the founder and executive chairman of Infinity Constellation. Thank you so much for being here today. Thank you. Thank you. That's all for this episode of Your Next Move. Our producers are Blake Odom and Matt Toder. Editing and Sound Design by Nick Torres.

Executive producer is Josh Christensen. If you haven't already, subscribe to Your Next Move on Apple Podcasts, Spotify, or wherever you listen. Your Next Move is a production of Inc and Capital One business.