Ed (02:50)
Howard, welcome to Scaling Up. I am pumped for this episode. This something I’ve been looking forward to for weeks and weeks, and I thought a great place to start was just to get some building blocks in the ground and start really briefly with your upbringing and where you grew up. You’re a storyteller, you’re an optimist, you’re a high energy visionary founder, and yet there’s no sense of entitlement. It feels though you’ve always wanted to go out into the world and make something of it off your own bats, and I feel like your upbringing was seminal in that. Maybe you can give some colour.
Howard (03:23)
Well Ed, I like to joke; I was a half Jewish fat kid that grew up in a red state in sang opera. It was not very popular among my fellow baseball kids at the age of nine, when you’re on the field, I know you were an athlete. American cricket we call baseball and I’d be on the field at the age of nine or 10 and my mom would come, and she would pick me up and she’d take me to opera practice every night in front of all the other boys. Now, if you’ve been on a sports team before in the eighties, you can imagine when the other boys caught wind of where I was going that it wasn’t the coolest place you could possibly be. So, I got really, really used to being rejected really, really, really thick skin early on and I think being okay with looking ridiculous and being ridiculous is a key part of trying to do something new and extraordinary.
Ed (04:27)
Thanks for sharing that. It feels as though that is such a wonderful place to go into your entrepreneurial journey because taking those risks, not worried about the outcome, not worried whether people were going to laugh as you said, feels as though that has really shaped your entrepreneurial spirit.
Howard (04:45)
It’s funny because you go from right field where you’re playing ball to the stage where you’re singing in front of 1000 people, 1500 people, and one of my favourite Shakespeare quotes, maybe my favourite is all the world’s a stage you’re out there whether it’s singing acapella in college or singing opera or performing, whether you’re pitching a big client, we’re talking right now, it’s a stage and the world is a platform. Being able to present well and tell stories. Well, if that’s ingrained in you at an early age, it can come out later in good ways.
Ed (05:26)
Let’s get stuck into the Yext story and it’s slightly convoluted the founding story. Usually, I love hearing these founding stories. There were so many businesses that were built along the way of that have either been pivoted or sold. It feels so convoluted that instead of going business by business, people just need to know that there’s this deep entrepreneurial spirit. And I’m really keen to pick out the key learnings and realizations that you had from building these businesses that led to the product that really catapulted Yext’s trajectory and that’s the listings product. So, I guess a long question summarized briefly, what were the signals that you saw in the market that Yext was going to be a success?
Howard (06:13)
Well, let’s take a step back and describe what I think we always have been, which is a group of people that were destined to do something, and it wasn’t obvious when we started our journey, what we’re going to do, but we knew were going to do something. And I founded Yext with Brian, who is still at the company today as our president and COO in 2006, nearly 15 years later, and with a guy I went to high school with named Brent Metz, brilliant engineer. And we intended to build a big company and were always a big company in on the inside. As we’re going around and kind of trying to build products for small businesses, we had this calls product where we would substitute a telephone number, a call tracking number in for a company’s phone number on Google Maps and track the phone call.
And I realized you could hijack essentially a company’s Google Maps listing, which if you were trying to be devious, you could use nefariously, we would never do that. But then I started to think, well wait a minute, there’s, there needs to be a way for a business to control their information in Google Maps and control their information everywhere. In fact, that led to our founding principle, which was that the ultimate authority on a business is the business itself. That McDonald’s knows what time their stores open, how many calories are in a Big Mac, and they should be the ones that are able to authoritatively publish that information everywhere. And believe it or not, that’s still our mission today to put companies in control of the facts about them, the answers about them everywhere, including on their own site, including in search. So, I think I’ve always been a fan of search.
Google as a kid growing up was incredible. It was heroic to watch their extraordinary ascent to dominance so quickly it made it possible to find whatever you wanted on the web. Their original link search was literally, if you remember, way better than everything else out there at the time. And it was just, I remember first hearing about it from my computer science professor in college and at Duke in 1999 that there was a better search and that really made me think a lot about algorithms and it was kind of a cool time. But then we started to kind of dabble in products to detect if a company’s phone number was different on Google or Yahoo or different on Google and Yahoo or Map Quest, which was at the time a mapping service in the United States that people used. And that’s where we came up with this, wait a minute, instead of trying to tell if a company and tell inform a company when there’s disharmony across their data, let’s offer them not just the ability to detect that they have a problem, but let’s give them aspirin to solve the pain.
So, we built this listings network, and let me tell you, it was really hard. It was really hard to do it. We were a, a growing company. We had not a ton of capital, but what we did was we bet the balance sheet of the company, this was kind of the move that broke the chicken and the egg cycle for the marketplace. And I’m not even sure if this, but we called up Yahoo. And Yahoo at the time was being walloped by Google this was 2010. And at the time they were still kind of mattered. We called up Yahoo and said, look, a lot of people are using Yahoo search. You guys have, at the time, I think it was 25, 30% market share, you have to do something different than Google. And we convinced them with a financial guarantee of around 10 million to open up their API and allow us to update information in Yahoo Local, which was their mapping property that allowed us to go to companies like Citibank and FedEx and Enterprise and say, hey, we can fix your information in Yahoo.
And then we called up MapQuest and said, look, we have all this data, do you want it? And we began to amass all this data on FedEx and all these other companies and quickly were able to get so much data that it became a lot easier for us to pick up the phone and call finally Apple and say, you’re launching maps. People have talked negatively about Apple maps and the accuracy of the data. We have a solution; we have a ton of POI data that’s authoritative. That was kind of how we got the whole flywheel going. And then finally in 2015, Google came along and that was just really a big deal. Then Alexa came along, and we added all the social networks. So that’s how we broke the chicken and the egg of the marketplace. It took a bet.
Ed (11:02)
It’s a great lesson for other entrepreneurs of being able to dip your toe in and see what works. And then when that something is going to work, you go all in, and you make a bet, and your bed gets made. You touched on a briefly then on this pivot from SME to enterprise and we’re still part of act one and listings is now the dominant business in the space, and as you said, it’s the business that Yext has been built upon, but this pivot is not to be sneezed out in a sense because it is a different muscle internally that needed to be built, whether it’s a sales motion, organizational structure and design. Can you just briefly discuss the scaling challenges of having such a pivot?
Howard (11:49)
It is hard to start a company unimaginably hard. I think Elon said you stare into the face of darkness and jump off the cliff. Trying to pivot a company is jumping off the cliff in the darkness and then trying to make sure you land at a different place than you’d initially started. For some reason I like to try to do hard things because life is short and we want to build great products and make something really, really, really big for customers that they don’t ask for, but once they see it, they know they can’t live without it. I like to say you want to talk to your customers, but you don’t have to listen to them. I talk to customers all the time, but I don’t listen to them. We listen to our inventors and product people that also talk to customers to understand their problems but then come up with solutions that, that they might not be able to see.
And that’s where we came up with listings in 2010, 2011, no one on the planet was saying, hey, I want an automated centralized clearinghouse to update my location data and information across multiple internets insert and endpoints. No one asked for that. They were, they were looking for manual ways to do stuff. Can you do this manually? But we built this giant clearinghouse because we saw that that was a revolutionary breakthrough solution. I like to say our original SME business was act one and listings, which is our current franchise is act two. And going through a transition from SME to enterprise, you have to do a couple things, but really you have to get the sales organization going. And that’s what we did 2011/2012 we started to scale up to sell to FedEx and to Citibank because selling to companies like that is a lot different than selling to a SME. Doing a half million-dollar deal is pretty different than doing a $500 deal. So, we had to fundamentally change the DNA of our sales organization in order to get from SME to enterprise and you have to support and service them too. It’s a totally different animal, but we did it and there is nothing better than jumping off the cliff, going through all the summer salts and the darkness and then landing feet up on the ground knowing that you did it.
Ed (14:15)
And it gives you a chance for act three, which is where I want to take the next theme. And that is the act three of answers, which is in its infancy in in many respects. But having built those foundational stones is really where the future of the growth of Yext can really accelerate. And it’s probably worth giving some context around answers, giving this Google like deep search experience, but on a first party website, and I’m sure there are many great examples that you can give, but the one that I love that so many listeners may in fact have used is the World Health Organization or a customer of yours, real time covid updates via their website that is easily accessible for people around the world as the source of truth.
Howard (15:01)
Google brought natural language search to the consumer around 2010 and natural language search, just like I said, algorithmic search from Google in 98 was a sort of 10x breakthrough. Natural language search was the same thing. And here’s how it works. Natural language search takes a query, it deconstructs the query into what are called intense and then tries to retrieve an answer from a structured database called a knowledge graph to answer the user’s question. So that’s why when you go to Google and you type in crispy cream, you see a list of Krispy Kreme locations. Keyword search, which was pioneered in the late mid-nineties, actually was pioneered before that but became prominent in the mid-nineties with the rise of the internet, is all powered on this old technology called Lucene. And Lucene by the way, powers Elasticsearch it powers solar, which are two of the sort of open source, semi-open-source search movements today.
Keyword search takes that keyword crispy cream, you run the search and it gives you the links back to places in its index that contain that exact keyword. So that’s why if you were to type in something like how many calories are in a Big Mac into a keyword search, it would attempt to find all of the webpages of the index that contained that exact query, how many calories are in a Big Mac and likely wouldn’t find any because that’s not how people would present that information on a website. Natural language search says, ah, you’re asking a question, how many we’re going to give a numerical answer, Big Mac is a type of hamburger at a restaurant called McDonald’s and so, we’re going to go and we’re going to look in our own database and find the answer. And if you type that into Google today, they say 535 or whatever the number is.
Meanwhile, if you type that into a keyword search, you just get a list of blue links back that don’t answer your question and just try to point you in the right direction. So natural language search was a huge breakthrough and the technologies that enabled this were largely machine learning were largely a lot of natural language extraction to be able to extract the intensive queries, but also just having a ton of knowledge in the knowledge graph, believe it or not, that’s actually the most important part of being able to answer a question, is knowing the answer. It doesn’t matter if you can understand the question, if you don’t know the answer. So, we realize that it Yext in amassing all of the location data for companies like FedEx or the hospitals and doctor information for companies like Mount Sinai, a huge hospital system in the United States, that we had built up knowledge graphs for all these companies and were giving all the answers, if you will, to Google an Apple and Amazon and Facebook on behalf of our customers.
We said, why not build our own natural language search on top of this knowledge craft so that the customer can answer questions themselves. And then you have this super powerful value prop because from one single knowledge graph, the company can update their answers in Google, they can update their answers in Alexa, and they can update their answers on their own website. Now this wasn’t technically possible until around 2017 because a lot of the technology was proprietary, but then folks began to open-source stuff like named entity recognition, which was very important. And if you look at open AI GPT3, there’s a lot of open-source stuff. So, our machine learning special, we don’t do fundamental research, but we do know how to apply it. We took the best stuff that Amazon and Google and others had open sourced and applied it to the vast reservoir of knowledge that we have for our own customers.
And that’s act three of Yext. We intend to bring natural language search to the enterprise, what Google brought to consumers, we’re going to bring it to every website and they’re five categories of search that we’re really going to focus on. And those are site search, which you mentioned. So, if you go to the who World Health Organization, you’ll see it there, you’ll see it in krispykreme.com, go to the pgatour.com. If we’re going back to sports, you’ll see it there. You can search for players and events and all kinds of stuff and scores, support search, which if you go to help dot yext.com, you’ll see an example there. We have a new technology called extracted Q&A, which can suck answers out of unstructured text, which is huge because that means the answer doesn’t need to be in the knowledge graph in a structured way to be able to answer a question like, how often does Yext suppress duplicate listings? Questions like that.
This just an enormous value proposition for any company that has a help site or support site. We take all their articles from their knowledge base and put it into their own support site, and our own knowledge graph. And bam, they can answer questions, it deflects customer calls, increases customer SAT, everyone’s happy. Workplace search is internal. That’s, hey, I’m going to go and search on employees or I’m going to search them an HR system. And then you have e-commerce search, which is which is the ability to buy products. And you have app search, which is the final poorly named category of search and app search lets a company a developer build search into their products. So, if you use Slack or you use Zoom or use something that has a search box in it, that’s app search.
So, we’re going to target all five categories. We believe it’s a forward-looking statement, but we believe we can be number one or number two in all five categories of search. And as Forester wrote a couple weeks ago, search is fun again, cognitive AIs the category they call it. And Yext, we believe we have the best answers search platform to help take companies there. So that’s our Act three. And it’s a long-winded answer Ed, but one of my favourite entrepreneurs is Jensen Huang from Nvidia. And I’ve been following him because Sutter Hill was one of our earlier investors and there’s still a Sutter Hill partner on the board of Nvidia and there’s still a Sutter Hill partner of the board of Yext and Jensen kept at it forever until he changed the world with NVIDIA and along the way there was ups and downs, but they did it. That’s what we intend to do here at Yext.
Ed (21:30)
I love it. And it’s a big bold vision and particularly in search it’s a historically has been this winner takes all market. I can’t remember the last person that’s used Microsoft Bing to search anything my eight year old if asked any kind of question is like, just Google it dad. So, there is going to have to be this change in in consumer behaviour. I am interested at how you’re thinking about driving that
Howard (21:56): In terms of how we change consumer behaviour. I don’t think we have to, It’s kind of funny. First off, every company already has, and that’s one of the coolest things about search. Every company already has. If you go to their help site, they already have a search box there. It just sucks every company already has a site search, they’re just terrible. And the Yext solution is in search better and faster and cheaper than our competitors. It’s better because it’s natural language. No other company right now is offering natural language search built off a knowledge graph to the enterprise. It’s faster because you don’t have to be a machine learning scientist to turn on Yext search. If a large company came to us tomorrow and uploaded all their data into our knowledge graph, they could have a search live and a snap and it’s cheaper because you don’t have to hire a bunch of machine learning people and AI people to turn on our stuff.
So, consumer behaviour is not necessary to change. And also, by the way, Ed, that’s why we see Google not really going into the space. Google was in the site search space, and they exited it in 2017. Remember you used to go to the website, and you see the little search with Google boxes up there. They don’t want people to search on a website because it cannibalizes their core advertising business every time that happens. So that’s our opportunity and we’ve got great partnerships with companies like Adobe, with their experiences manager, have just huge swaths of companies using them to power web experiences and digital experiences of which search is super, super important.
Ed (23:33)
I was going to ask why Yext was going to win in this space, but I feel as though you you’ve answered that deeply. One thing that I do want touch on is you talk about this natural language processing there’s obviously a much greater technical proficiency required to integrate this if you’re going to do it in a fast and seamless way. Can you give some insight into any operating change that’s been required to cater for these greater technology needs?
Howard (24:01)
I think that first off, natural language search is just, that’s the term people are using cognitive AI to describe what this and we have some really cool stuff. But really it comes down to having all this data and the fact that we have, and Dom will correct me on the number here but it’s hundreds of millions of structured facts in our collective knowledge graphs for all these companies. That’s really where we can get started with the company really fast to turn on a search that just works for them. And that’s why we’ve seen this product fly off the shelves. I think we had, and we said on our investor call couple weeks ago, 245 answers deals close in our first year. And that was during a pandemic with huge headwinds when our sales force was historically very field driven, very in the field, talking to customers totally isolated, only selling over Zoom. So, I think our right to win here comes down to the fact that AI powered search, or whatever you want to call it, natural language search, cognitive AI, you can call whatever you want. It’s the ability to take a string, deduce it and give an answer from a knowledge graph and not send you to a website. That simple idea is behind, by the way, the second or third most valuable company in the world, depending on what day you look. And it’s our intention to be the second most important search company in the world.
Ed (25:47)
Let’s pivot now to something that I know you are equally as passionate about and that’s the challenge of scaling the culture and the people of your business. And maybe we can dig into the changing role as a CEO from founder to running a massive, listed business. Couple of tidbits here. I’ve read that you’ve, in the past you’ve had these turbo sort of five minute meetings with the entire office, which I love the concept, but the insight maybe you can give when you look around as a founder and you realize that you don’t know everyone’s name, that the culture that you have created is now largely out of your control, but still it’s really reliant on your energy even though it’s breathing without your input. Maybe you can give some insight into that emotion and how you’ve thought about that changing over time.
Howard (26:37)
Well first off, on culture, everyone, every company says, oh, people are our most important asset. Everyone always says that we try to live that there’s a certain kind of person we really like. We try to recruit those people to our company. There’s a group of people at our company that have been here for a really, really long time. I’ve deeply began to understand leverage. You don’t need a lot of people to make revolutionary products. It does not take an army of engineers to conceive of something incredible and to make it, sometimes it can take an army to support it but to come up with it. I believe in individual exception, at Yext we believe in individual exceptionalism. So, we have some people that you’ve heard of 10xs or a 100xs and we deeply believe in that, that there are a few people in any company that really can take things to the next level. One of the cool things about, as your company goes from 10 to 50 to 100 people, to 200 people to 250 people to 500 people, by the way, 250 is when you lose the names, most people lose it at 100, but the founders tend to try to know everyone until around 200.
Ed (28:01)
And then it’s impossible.
Howard (28:02)
And then it’s impossible. That’s right. we have 1300 odd people today and odd they are. But the point is that if we make a great product, the number of people it takes to make a great product doesn’t scale linear. And I mean that in a, in the reverse way, which is if 20 people who are extraordinary can make something awesome when your company is 5,000 people, you don’t need 40 people versus 2,500. The same group of people can make something great and then put that into the sales channel as that grows to achieve scale. So what I’ve learned is to pay a lot of attention to who you spend your time with and then go really deep with those people now and then for the stuff that scales, you have pros that come in, pros that can come in and build the systems and that’s why people like Steve Cakebread or David Rodinsky, you bring in the people that know how to build the systems at scale.
Ed (29:04)
I think you’ve been reading my notes because the next question was, there’s this nucleus of a founding team that have been with you for a long time. You mentioned Brian and Tom Dixon was there forever and a day Hallock who’s now the CFO of Verta was there for 10 plus years. And then there’s been this scaling up of bringing in these season veterans and in your case, you brought many in from perhaps the greatest software business of all time being Salesforce. You mentioned Steve, David, Jim Steele, when is it time to bring in those pros? At what point in time as the founder did you think now is the time is right? It feels like there are some natural stages that other people building businesses should be thinking about as to when that time is.
Howard (29:50)
I would go back in time and say that we brought in Jim too late. We brought Jim in in 2017 right before went public. And you have the benefit of hindsight always. If I could rewrite the story, I would’ve brought Jim in around the same time Steve joined us in 2015. And I think that would’ve given us a more robust enterprise team his way kind of earlier on, which I suppose if you’re asked him at the time, that’s four years after we sort of achieved product market fit and started to go after the enterprise could have even argued for earlier actually on the sales side. So, I think for any founder, first off, you can never, ever hire seasoned pro to run product.
That’s hard that has to come from your group of people that have been there deeply. Maybe you can buy a product, I guess you could do M&A, I don’t really think about that. But what you can outsource, if you will, and as a founder’s head are first off GNA, which Steve was a pro and people like Steve who have been around the block and taken Salesforce public and taken Pandora public and have written the book on how to take a company public best seller, literally they have a lot of value to add. And it’s frustrating for you at first because you’re so used to controlling every little detail and controlling every, I remember I was so mad one time I was sitting, I don’t remember where, sitting with Tom outside and maybe at some restaurant, some diner, and my phone buzzed and I’d see this purchase approval. This was 2015, maybe like a couple months after Steve joined, it’s like purchase approval for Dun & Bradstreet credit $450,000.
And I literally lost my temper. I mean I threw my phone down and I just, I couldn’t understand what Steve was buying. It was a credit checking thing. And I remember thinking to myself that I bet we didn’t even have $450,000 of bad debt in the company last year. So, we’d be spending more on credit checking than we would be on what we’d actually recoup from it. Now I understand what he was doing was he was just getting ahead and building the system to be able to do this at scale, to be able to make sure that were a compliant, stocks, accounting. But I had to transition from trying to run a tiny little shop running Yext like I was the shopkeeper of a cuckoo clock store in Switzerland or something and knew every detail and every inventory part and was counting every dollar or Swiss Franc that came in to letting someone else do a thing. And Steve, that was amazing. I wish we had probably done that a little earlier in sales because that is so important to any SaaS company. But we keep product and inventions and engineering really close. That’s how I keep leverage across the company.
Ed (32:52)
It’s really interesting insight that you just gave. And maybe just to dig in one more layer into this relationship with Steve Cakebread listed, seasoned CFO. What else has he added to the development of you as a CEO to see what he can add to the team?
Howard (33:11)
When Steve first joined us in 2015, I was sure that I was smarter than him and now I am sure that he is smarter than me. It’s really annoying. He’s always right about the big stuff and I’m usually right about the big stuff too, but he can see things and connect things from different angles that I didn’t quite see, and he has a calm way about him of letting it all kind of happen. But it makes me think that he must be a secret Jedi knight able to control all kinds of outcomes in his way.
Ed (33:46)
What about the other big relationship that you’ve had during essentially the entire journey of Yext and that being the chairperson Mike Walrath, this a deep mentoring relationship and sometimes it’s unusual for a chairperson to be able to scale as well as Mike has, obviously he was a super high quality former operator himself. What do you look for in that relationship and value most of him as a mentor?
Howard (34:16)
We’re really lucky to have Mike, Mike has been there every step of the way. He is probably my referent other most closely in that he sees things the same way I do. We will watch the same situation unfold and have the same conclusion. We read things in the same way. And to your point, it’s not like he has been the chairman of 45 public companies before. It’s pretty different than Steve. Steve’s on all kinds of boards. For Mike we’ve grown together a lot, but everyone needs a coach. Everyone needs someone to call them out on something. It’s like when you train and Ed, I’m guessing that as an athlete or former athlete, you trained a lot, spends a ton of time in the gym.
Ed (35:03)
Can’t you tell?
Howard (35:05)
Yeah, well under your Yext hoodie your Yext turtleneck there, I can still see the muscles. And there’s no question that you train harder when you have a trainer telling you and pushing you. It’s just human nature. So as much as I try to set a tone of hard work, detail, orientation, invention, risk, a little bit of risk taking at Yext, putting yourself out there, business development style stuff Mike pushes me further than I would push myself. He knows just how to do it and that’s what the best trainers and the best coaches I think know. And he is really, really, really a great listener.
Ed (35:43)
It’s a wonderful insight into what the power of a great chairman and CEO relationship can be. Because often it can be about governance, it can be around a check and balance and making sure that the executives are being kept in check in many respects. But this deeper than that, these two entrepreneurs binding together to really have an execution of a long-term vision.
Howard (36:09)
I made the decision in 2011 to step down as chairman of the company and give it to Mike and ask, well let me say it this way, ask Mike if he’d be willing to serve as chairman. And he accepted and that was me recognizing that this was going to be a multi decade journey and I wanted help and I went out. I remember when were raising money the end of 2009, beginning of 2010, we had IVP, we had major institutional investors investing in the company. But I made sure to chase Mike Walrath down because I wanted him to be in the company and I wanted him to be our independent board member and I’m really lucky I was able to get his attention.
Ed (36:56)
Even before Covid, you had this sort of distributed head office and in many ways that’s slightly unusual for a business of your size and scale and what you’re trying to achieve. Did Covid solidify these thoughts and the benefits were there that you thought would be there? Or is there some kind of hybrid Yext moving forward around how best to organize your business?
Howard (37:20)
Well, we talk about this all the time. So, you see Slack and Salesforce, hey, we’re Twitter, we’re remote, hybrid forever, remote forever. If you want permanent remote work, you see others, Google and Amazon, hey, we need you back in the office. I think we’re still finding our way here, but fundamentally we are going to be an office centric company. We always have been. We have great headquarters in New York, which are now finally opened by the way under very constrained circumstances, three days a week for a few hours with a certain number of people that’s all following the official rules set by the state and the city. Same with our beautiful Washington office. But I do fundamentally believe that people are better when they’re together. Not all people, but certainly our kind of people. And we’re going to expect if it’s safe that people do come to the office if they can make it. And that’s going to be our expectation and if you’re asking how we’re going to mandate that, we won’t, but we’re going to use the most powerful weapon on the planet Ed, which is fear of missing out FOMO. Oh, it’s going to be fun to be at the office. We’re going to have awesome, awesome brainstorm’s all the time, cool speakers, the spaces are beautiful, we’ll post them on Instagram. That’s the best FOMO tool in the planet.
Ed (38:34)
Love it. Maybe we can change tact slightly just the experience of, of going public and maybe just want to dig into, there’s this tension that Imagine exists in your world of being this visionary founder with this massive long-term view of what the business can be. And yet you have to balance that with quarterly reporting. I’m sure if you didn’t have to do it, you’d probably love it, but at the same time it creates a rigor to what you do as well. Can you give some insight into, into that tension?
Howard (39:02)
Well, I think it keeps you honest. we are right now launching new products and getting into new markets, but at the same time we’re doing so in a pretty effective, efficient way. And if you’re private, I think we’d probably be a lot sloppier and it’s not obvious to me that we’d be a better company. I think a private company that raised a gajillion dollars from Tiger Global at some gajillion valuation, they’re, they’re going to do fine, but they might just get ahead of themselves a little bit. I was always careful at Yext to never raise money at too high of evaluation because I wanted to have a fair hurdle to get to the next one and to the next one. And I wanted employees to, you know when you’re private, you have stock options. So, I think being public makes you better. I think it is like having that trainer there yelling at you and it’s not always fun. But that said, I think over the long run, if you look back in five years at Yext with what we’re doing now, I think being public is going to make us a much better company than we otherwise would’ve been.
Ed (40:11)
Interesting you touched on raising money at Fair Valuations. I know that wasn’t part of the initial question, but it’s such a great insight for other people who are going through the fundraising journey of making sure that everyone has a great experience and thinking about what bar do I have to jump over here if I go and take the biggest number? And there are some crazy numbers being flown around at the moment in the private market. So, I think that was a lovely piece of advice that I just needed to call out.
Howard (40:39)
And I’ll say that further, make sure you don’t pick the high if you’re an entrepreneur reason, but you don’t pick the highest number, you pick the right partner and a lot of people are so focused on the highest number that’s just, it’s not the right thing to do. It’s not the right thing to do.
Ed (40:54)
Couldn’t agree with you more. Many founders at some kind of scale stop interacting with investors one on one. there are some massive companies, Square or Shopify they leave that to the CFO and I’m sure there are benefit of both approaches their founders and they want to just run the company. How do you view that relationship with public market investors?
Howard (41:20)
Well, I think there are different kind of investors. When you go through and you’re an entrepreneur and you go through this road show and the banks’ Morgan Stanley or Goldman Sachs or JP Morgan, they put you through this road show and you meet all these people and kind of like, like a, it’s almost like a speed dating drill. It’s the road show and it all happens really fast, and your life’s work is sort of sold in an auction at the end of the day. And you’re almost outside of it watching it if you if you know what I mean. And every investor, when things are good as your friend, they’re all, I have a guy that hugged me on our IPO and sent me books and stuff and then we find out that they’re not a shareholder at all. In fact, they might be shorting us. So, it’s this whole crazy game. And the thing you have to learn to do is there’s certain investors that will say things that are true and tell you the truth and then there’s others that might have a different intention in mind. When we, and this a forward-looking statement, when we are as big as Shopify or Square and Workday and that size of company, I fully intend to still talk to our biggest and best long-term shareholders.
Ed (42:25)
People underestimate this brand flow on of, of being a public company. What was your experience in Yext being put up in lights and ringing the bell at the New York Stock Exchange and then the flow on of selling deals to these massive enterprises right around the world, being able to point to your ticker on the NYSE.
Howard (42:46)
No question. It’s a help, especially globally going to Japan where we have a big presence that is really important there in Europe and Germany. Germans like to buy from the best and you do get a brand benefit from being publicly listed. So that would be another benefit of being public. The experience of the IPO itself brings the company together, anybody that was there, they were there, they were.
Ed (43:15)
It’s a moment in time. Last question. The way the world is today, it feels as though it’s growing in this bipartisanship and it’s going to be business leaders that can have the greatest impact on changing society from the bottom up. And I get a sense you’re inspired to be part of this, maybe some colour on how you feel like you can change the world with Yext.
Howard (43:40)
Well first we can change the world by making our customers successful with search and natural language search, knowledge graph, having their answers and listings and Google and Alexa. So, we’re going to change the world by bringing natural language, search the enterprise. That’s the first way. The second way is by having today 1300 employees and their families taken care of. By the way, that’s 1300 today. But we intend to be a much bigger company and so we’re going to make sure that we take care of our employees and then we’re going to take care of our, we intend to take care of our investors, the third stakeholder here, customers, employees, investors, and shareholders. And I do believe that a company is the ultimate vehicle for achievement in today’s western society. I don’t know enough about China, but in Western society it seems to be, and certainly your company can have a positive impact in the world.
I think there’s definitely different degrees of how companies have gotten involved with social and political causes. You look at companies like Coinbase for example, who have said, we’re not getting involved. Today Base camp announced, hey, we’re actually banning political discussion from our channels. You can’t do it. I think that’s a little extreme. I think it’s impossible to not exist in the moment and to not see what’s around you. And you can become disconnected if you’re not listening to the world around you. So, we’re definitely in an 11 right now in terms of political discourse, but I think Tim Cook said it best, which is you just have to do what’s right. We will always, always do what’s right as long as I’m running this place, which I hope by the way is a long time.
Ed (45:29)
That feels like a, a natural place to wrap up, Howard, thank you so much for your time, your energy. Absolutely loved it and hoping maybe we can do this again one day.
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