Last week, Yext CEO Howard Lerman dropped by Extra Crunch Live for a chat about his former startup, pivoting and becoming the CEO of a public company.
Yup, which focuses on business information and corporate search products, it went public in 2017, making it one of the first companies to present a demo at a ProWellTech event and eventually list.
The full recording is incorporated below, along with a series of extended quotes if you prefer to read. But here, above the paywall, I wanted to share my favorite part of the conversation.
It's about how Yext got into the business information game - what it calls PowerListings - from its product roots since raising $ 25 million Series C.
At the ProWellTech50 event, Yext showed a service that can record and transcribe phone calls and provide some extra analytics. Here's how Lerman described the moment (quotes sorted for readability):
I launched it at ProWellTech50 in 2009, we actually had some really cool technology. We have found a way [...] where we could enter a tracked phone number on a business listing, record it, transcribe it [and] then do a semantic analysis on the call to determine "Was it a good call or not?"
That demo product worked well for Yext, as Lerman explained:
Within nine days of this launch, after we actually released it, we received a $ 25 million round from IVP.
At the time, Yext put together a $ 20 million business which, according to Lerman, was built "very quickly." But, he continued, things went awry from there:
At the same time, it turned out that this was not a great business model to scale to 100 million in revenue - and beyond. And I found out probably six months later [and] you have to be intellectually honest with yourself. See What's Happening: See the churn rate, see the customer acquisition costs that occur, and I was faced with the choice. And one of the things I think we did that was commendable was starting a whole new business within this company's existing limits table. And to this day, we have some of the same shareholders that were with us in 2008.
What happened next was "a little complicated" in Lerman's own words, but Yext started a new company "under the old company", sold the old company to IAC (ProWellTech coverage here). That money went to "NewCo's balance sheet" and Yext built "this whole new idea for synchronizing information across the web. And that was the PowerListings franchise. [which] it has been the foundation of what we have to date. "
Today Yext has a lot of research focus, but PowerListings is still part of its product family.
The fascinating thing about Yext's story is how the company reinvented itself a couple of times, all while climbing before and after its IPO. We usually read business stories that are oversimplified. The Yext story makes it clear that even a few changes don't mean something is wrong. You can shake up your startup and go public.
If you need help getting through the paywall, go here. Otherwise, go ahead and hit Play on the video and enjoy the quotes.
Extra Crunch Live continues this week, with more VCs and founders taking turns for long, in-depth chats.