By Jules Maltz
There are certain moments that shape your future. For me, one of them was walking through Central Park at dusk in September 2009 waiting for a phone call. I had joined IVP a year before and was working on my second investment. I had been introduced to a small New York startup called Yext six months earlier by Ed Zimmerman, a lawyer, and Yext angel investor, and had spent the last week frantically trying to convince the company that we should lead their Series B.
The phone rings.
Dennis Phelps, a partner at IVP, and I were told that we needed to come to Yext’s office right away. The voice on the other end sounded serious. It didn’t feel like good news.
Thirty minutes later we walked into a cramped conference room to find the entire Yext executive team waiting for us. On the table in front of them was a signed term sheet and shot glasses. My heart leaped!
Howard Lerman, Yext’s CEO, has always had a flair for the dramatic. He prefers live demos to stale presentations. In 2009, he snuck into TechCrunch 50, an early-stage pitch competition, to launch a new product and announced to the audience that he was going to do $20 million in revenue that year. It left everyone speechless. For years, he delivered a weekly “manifesto” speech to all employees, reminding his team why Yext needed to exist in the world. Board meetings were equally entertaining. We had a war-themed meeting complete with camouflage outfits, a wireless beacon demonstration, and Howard even brought in a 30-year-old Voltron toy to illustrate a particular point about teamwork. Howard was (and is) the ultimate visionary and everything was going well for Yext….until it wasn’t.
A year after our investment, Yext’s rapid expansion started showing signs of strain. The company’s original pay-per-call advertising product for small businesses wasn’t growing efficiently. Churn and acquisition costs were too high, and new verticals weren’t as profitable as existing ones. Yext faced a choice of trying to fix these challenges or sell the entire business. Instead, Howard and his team picked an ambitious, but risky, third option. Cut the core business to profitability and invest heavily in building an entirely new startup within Yext. Launching Yext Tags in early 2011, the company pivoted to a subscription software product to help large and small companies manage their digital information. The next year, Yext sold its original business, renamed Felix, to IAC to focus 100% on its rapidly-growing software product.
With the new product working, Howard and his co-founder, Brian Distelburger, turned their attention to building out a world-class team to scale the business. They looked for executives who had operated at larger companies and could handle the challenges of rapid growth. Bringing on Wendi Sturgis, Steve Cakebread, Jeff Rohrs, Jonathan Cherins, Marc Ferrentino, Skip Schipper, Ho Shin, and, recently, Jim Steele, helped propel Yext to new heights, reaching over $124 million of revenues in the company’s most recent fiscal year.
Last month, Yext went public on the New York Stock Exchange with a closing market cap of over $1 billion. It’s been an incredible journey from rapid growth to major challenges to rebirth to rapid growth again – all in the span of less than 8 years.
I’m so grateful that Yext selected IVP as a partner in 2009 – and gave me the chance to grow as a venture capitalist and learn that startups are more like roller coasters than escalators. I’m deeply appreciative of the many early Yext employees (Brian, Brent, Alok, Tom, Sean, Bryan, Temy, Rob, and others), who rose to the challenge when times were tough and fought to make Yext successful today. And, I’m most thankful for Howard, who taught me to always dream bigger, never give up…and of course, that ENTP is the best Myers-Briggs personality type 😊
The journey continues, and the Yext IPO is only another milestone on an exciting path far into the future.
As Howard would say:
Jules Maltz is a General Partner at IVP, a later-stage venture capital firm based in Menlo Park, CA.