Joe Walsh Transcript
Clint Betts
Joe, thank you so much for coming on the show. It's a real honor to have you. Tell us about Thryv, and how it became a publicly traded company, and how it all started because I think this story is fascinating.
Joe Walsh
I was an entrepreneur, started a company competing with the telephone company Yellow Pages years ago as a really young guy, and I built that up into a larger company, sold it onto a bigger company. I joined this company called Yellowbook in New York at the time. It's a community directory publisher which we expanded all over the United States and eventually partnered with a company in Europe and went public on the London Stock Exchange so it was a 25-year really fun run.
After that, I set up a board advisory practice and I started working with hedge funds and private equity firms that had troubled companies in their portfolio. We had made a lot of money for a lot of private equity companies when we took this prior business from 20 million to four billion, we had a long string of PE guys. And there's no shortage of PE-backed companies that are struggling.
So one of the most notable ones that we've worked on was Cambium Learning Group which was an education company, it was NASDAQ listed ticker symbol ABCD, struggling really with the transition from printed textbooks and materials to the demand for digital in the education space. I was involved with that for six and a half years as the executive chairman. We basically pivoted from the printed materials to a monthly recurring revenue stream, what you would sort of call a SaaS software. And we expanded into 43 countries around the world. And a private equity firm came along and took us out. I started about 70 cents a share and we sold out for $14.50 a share so it was a really great run.
Clint Betts
No, that's awesome.
Joe Walsh
For me, it was a masterclass in monthly recurring revenue and the power of that model. When the next client that came over the transom was our own competitor, the telephone company's Yellow Pages business. And they came in and said, "Would you help us with a strategy?" I came back to them with the strategy which was very simply this: big companies, enterprises are moving all their computing into the cloud and small businesses will end up following them.
Small businesses will harness these cloud tools, particularly as they get simpler and easier to use, and they can run them on the devices that they already own. There's a great opportunity, I thought, for the Yellow Pages business with 400,000 customers and a giant salesforce that had been in business for 100 years, to transition to that opportunity and deliver and basically help those small businesses.
They ended up liking the idea a lot and they convinced me to bring my team in and execute it so it was a public company. We took it private because it was really badly indebted and needed to be restructured. We adjusted the cost base, got the company refocused on its new mission which is guiding small businesses to better growth using our all-in-one easy-to-use app. That process has unfolded pretty well to the point where we've taken the company public again.
About three years ago we did a direct listing on NASDAQ and have re-listed the company. I've been here for nine years now. It's been a nine-year turn that capital structure problems around and created a dynamic fast-growing new business. Our SaaS software business is now our dominant focus. It's not quite yet our dominant revenue but it will cross over in the next year or two and be the dominant revenue piece.
Clint Betts
And what have you learned from building the technology and the software behind a legacy company like this, taking it all into the cloud, and all of that? What was that process like?
Joe Walsh
It's interesting. Over my experience building software, in a lot of ways it's getting easier and easier. And no I'm not referring to AI. It's just that people are building Legos, they're building building blocks, they're building embedded tools that they want to sell. It's one thing to build a piece of software that's got an end either consumer or an end business market, it takes a lot of capital to reach that market and get distribution. What a lot of smart engineers do is they found a company and they start a software tool that helps with one little piece within the chain which is much, much easier to market to because you're basically selling within the industry to your community.
And as a software developer, you can grab these Lego blocks and plug in these embedded tools and it dramatically improves the quality of and speeds up the development time of software development that you're creating. So you're not sitting there inventing a wheel from scratch, you're grabbing a bunch of different wheels and plugging them into your graphical user interface, to your strategy, and then you're writing the stuff that is missing. It's a much easier process than it would've been 10 years ago.
Clint Betts
I never really thought about it that way but that is super interesting. And you're in a space where you're competing with the Salesforces and HubSpots of the world. How are you differentiating from them?
Joe Walsh
I mean, mostly by who we deliver to and by the complexity of our solution. We use Salesforce, we're a Salesforce customer, we're over a billion in revenue. We're also a HubSpot customer, we have about 3000 employees. We have people who've gone to school and are Salesforce and HubSpot certified. We also have some systems integrators that work with us to put it in.
What's different about Thryv is that our target market is true small businesses. These are sometimes two to maybe 50 employees, very small businesses, that don't have time or money to have a systems integrator put a piece of software in. This is the actual business owner and his partners or his husband or wife or office manager learning how to use these consumer-grade tools that are fairly simple. You'll never see somebody that says that they're Thryv certified, there's no certification. You can be onboard and learn Thryv in a few hours very easily.
Clint Betts
So it's the simplicity and focusing on the small business entrepreneurial medium-sized businesses. That makes a lot of —
Joe Walsh
No, it's small businesses, let's be clear.
Clint Betts
Oh really?
Joe Walsh
These are small businesses. There's different definitions of medium, but I would say HubSpot is the medium where they're going after — I think their target ideal client is 2000 employees. They would consider that a medium-sized business.
Clint Betts
That seems like a large business to me. That makes sense.
Joe Walsh
I don't know if you realize this but there's only 500 companies in the Fortune 500.
Clint Betts
As a public company CEO you have to track macroeconomics as well as internally, and what's happening with your company, and your numbers, and report those every three months, of course. Then you also have to think about what's going on in the world and how what's going on in the world might impact your company and future of the company, and revenue, and all the various things. What is your take on the current state of the world?
Joe Walsh
Look, I tend to be a pretty glass-half-full guy. I mean, there's always stuff you can point to in the news. And, obviously, things that are going on right now in Israel are scary, Ukraine, that's awful and I feel terrible for the people involved. There's almost always some conflict going on in the world. You can fixate on the things that you can't control or you can spend time on the things that you can. I tend to be very optimistic about the opportunity that we have in front of us. I think the opportunity to build a successful business today is good or better than it's ever been. I'm pretty optimistic.
Clint Betts
You're in a segment of the economy that I'm sure a lot of people are paying attention to right now with inflation, and so many big companies cutting jobs, and things like that. I wonder, are you seeing an uptick in people starting their own businesses and needing to use Thryv? What is this pseudo-recession? I know we're not technically in a recession but, obviously, interest rates are super high. Everything that's going on with the economy is confusing. What has that done to your segment and your customers?
Joe Walsh
If you think about the legacy of our company, we were the Yellow Pages and marketing services for the last 100 years so we have a lot of old-line established businesses in our customer base, we have about 400,000 customers. And the average across our customer base has been with us for 15 years. So these are very old-line established businesses and they tend to do the nasty things in life. You got a dent in your car, you got to get it fixed, your tooth hurts, you got to go to the dentist, your air conditioning doesn't work, so you call the guy to come repair that. I kiddingly call it all the nasty things in life, the things that happen and you have to solve. That's our core customer. Their business is very resilient. With that, ours has been pretty steady Eddie. We don't tend to serve the brand new startup as much. I'm not saying we have none but that's not really the target for us. So that's given us a fairly steady business with low churn and a predictable build. We're growing our software business pretty fast.
Clint Betts
How is artificial intelligence changing your life and the company's life?
Joe Walsh
It's beginning to change every business. There's a lot of copywriting and so on that we do for our 400,000 customers, and we have human beings that do that but they're now aided by AI which is making them vastly more productive. We write a lot of software and we check and do QA on a lot of software. AI is helping us speed up the writing and really do a better job and a faster job on QA. So it's sort of all throughout the business. And even our tools themselves, our all-in-one software platform called Thryv, is a tool that you could run your small business on. You simply get your phone out, you click on the app on the phone, it opens up your schedule for the day, you click on the client card for 10:00 and it shows you who your 10:00 appointment is and which one of your agents is handling it at 10:00, how they paid last time, what complaint they mentioned when they called in to make the appointment.
So when you think about that sort of interaction, there's a lot of AI in there — it’s as simple as customers learning how to use the tool. When they click on help center articles, AI is helping with that process. When they want to set up a marketing campaign we have a tool called Marketing Center that helps them set up marketing campaigns for their business. It helps them build websites, helps them build landing pages. AI will write all this stuff for you now. If you don't know what to say you can say, "Give me a suggestion," it'll just write the whole thing for you. Then you can just edit what it writes. It's really good. It's surprising how good it is. It's really sped up and enabled a lot of the services that we provide. Made them better, made them faster, made them cheaper.
Clint Betts
You mentioned earlier you saw the value of the MRR model, the monthly recurring revenue model, and generally the subscription model. What advice do you have for entrepreneurs who are pivoting to that or trying to figure out what their revenue model should be given your experience there?
Joe Walsh
I mean, I think the monthly recurring revenue model, if you can get to high engagement where they're actually engaged with and using your product, and you can prove value and have low churn, it's an incredible model because you basically begin every month with the revenue you had last month less a very tiny amount of churn and then it builds. And so you're not starting January 1st of the year at zero, figuring out how much you can go sell. You're sort of starting with where you left off last year, less a very tiny calculable churn number, and then you're building from there. That part of it, the economics of the model, are very, very powerful. The predictability of the model is very powerful.
Within Cambium, when I was in the education business, we transitioned one of our units, one of our businesses, from a perpetual license to a monthly recurring revenue stream. And it was a difficult couple year transition, our numbers looked terrible for that unit. When the bow of the boat finally swung around it was very powerful. And to this day, continues to be. It is a great model. And it allows small businesses or consumers, whoever your customer is, to sort of pay as they go which makes it a little bit easier.
Clint Betts
What have you learned about leadership over the years? The difference between leading a private company or an early-stage company versus a public company? And how does your leadership change or doesn't change given the company you're leading?
Joe Walsh
I don't think it changes that much between the two. I mean, if you're public you have to be a little bit more careful about referring to specific numbers. I tend to be pretty open, pretty transparent, nearly an open book management type of approach so people feel like they're in the know and the team is not mushrooms. You can't say quite as much when you're a public company, obviously. But my philosophy, I guess, is that you have to be clear about what your beliefs are, and you have to share those and allow people to self-identify if they can align with those core values, those beliefs. And it's amazing, you attract people who share those beliefs, who are inspired by those beliefs, and you repel people who don't feel that way and you end up with a pretty locked-in group of people. And then I think you have to walk your talk so that you can retain those people who are following you, who believe.
Clint Betts
How have you handled the work-from-home situation given post-COVID and the debate over whether everybody should be in the office, hybrid work, things like that? What have you found that works?
Joe Walsh
No debate for us. Like everybody else we scrambled to equip people to work from home over those early days in March when the NBA stopped at halftime and all that and we were all trying to react, we were probably a lot like everybody else. We told the people, we'll be out for a couple of weeks, we'll be updating you. And we began to do regular webcasts with our employees in place of the in-person meetings that we used to do. The first time we extended we said, "Well, okay, we're going to push this out to the end of April and hopefully we could be back by May 1st." And as we went through April we realized, we're not going to be back by May 1st. This is going to go on for a while.
And so pretty quickly we made a decision to go work-from-anywhere. We had at the time over 600,000 square feet of office space around the world, and we're a global company, and we just pulled the ripcord and started subletting where we could, getting out of the buildings. And we are a full work-from-anywhere company. We made that decision only nine or 10 weeks into the pandemic. We saw the surge in productivity that we got.
We realized that there were downsides but so many benefits to work from anywhere. We have maybe a dozen people that go into our main building every day and make sure all the servers run, and the computers run, and all that stuff. But for the most part, our entire 3,100-employee workforce works from wherever they are. And that's changed. People have been able to move home near their folks, people have been able to move to the beach, people have been able to go wherever they wanted to go. The freedom that's come from that has been powerful.
And we're a growing software company so we're recruiting a lot of talent, a lot of programmers, a lot of product people, and we can recruit that talent from anywhere. You have to pay a little bit of attention to time zones and legal boundaries but we have people working-from-anywhere. And as we've been acquiring companies and we find talent in those acquired areas, they're able to work on the main global projects of the company in this work from anywhere environment. So we think the benefits or manifestations are huge, and they more than outweigh the little negatives that people focus on. And there are ways to overcome those negatives. We are a committed work-from-anywhere company with no thoughts of ever going back to the office.
Clint Betts
That's interesting. A work-from-anywhere model you can hire from anywhere in the world which expands your talent base exponentially. You know what I mean? I believe you're based in Dallas, right? If it's all work from the office, your employee base is Dallas or wherever else your various offices are. A work from anywhere it's like now you can pull from the world, and that, obviously, has its advantages. The concern of the people who say, "Hey, you need to be in office" is maintaining culture. And how do you maintain culture and keep everyone aligned on the mission of the company and things like that? How have you managed to do that at Thryv?
Joe Walsh
Well, it's an excellent question. And I think you do have to be conscious of it. I want to make one editorial comment here.
Clint Betts
Sure.
Joe Walsh
The worst scenario is the lukewarm Christian where you're out of the office but you make people come in some of the time and some of the people are in some of the time because it leaves somebody on the screen and other people in the room. When everybody is similarly situated it works extremely well. Now that the pandemic is largely over, we are able to actually get people together in person occasionally which now we have the best of both worlds. So we have the cultural team building of getting together once in a while and we have the productivity and the joy of being able to work from wherever you want.
But to answer your question about culture. I've had scores of employees tell me they think that they feel more connected to the company's mission and vision than they ever did when we were in offices. We had offices all over the place. They feel like they have a better relationship with me as the CEO and the other senior leaders than they ever did. Because we do regular webcasts at least monthly, sometimes even more than that. Having a chat just like the one you and I are having, it feels very one-to-one about what's going on in the business, what we're working on. We bring in guests from various functions in the business. We do a lot of recognition. I think we do way more recognition and we do it way better now using a regular webcast cadence than we ever did when we were in person. And I think people feel more glamor and more recognition in the way that we do it now. And we put a lot of effort into it. We run basically like a news magazine show on a regular basis where we're coming together and sharing.
And I'm always a part of those meetings. I take some time and just talk about what's going on very candidly, including what we're struggling with. And I think people feel very connected to that. We have an inscribed, very clear set of core principles and values and we reference those a lot and talk about the decision that we just made to do this ties back to this core value. Here's why we're doing it, we make sure people have alignment. And we make sure that there's a sense of mission, that there's a cause that we're all pursuing together. That's the connective glue that pulls our business together.
Clint Betts
Joe, I can't thank you enough for joining us, seriously. It's a real honor to hear from you and everything you've done in your entrepreneurial journey. We end every interview the same way. At CEO.com we believe the chances one gives is equivalent to the chances one takes. I wonder when you hear that if someone comes to mind who gave you a chance in your career or your life?
Joe Walsh
I started my own business. So I was the head of that business. But at one point I sold out, I was headhunted to work in a private equity leverage buyout business, it was about $20 million in revenue. And I went in not as the CEO, I went in as a key manager. I was working for another CEO. And after a period of time, the PE firm became disenchanted with his leadership and some of the company's performance and they very suddenly fired him.
The prior generation was still on the board, was still around, The founder of that business was in his 60s, and a bit of a mentor to myself and a number of other people. He basically vouched for me and said, "I know you guys think you have to conduct a search to find a CEO, you don't have to, we got the guy. He's only 29 years old and we're going to give him the keys to a pretty big company but he can do it. He's been a CEO before he knows what he is doing. I'll quarterback coach him and make sure he gets there."
He essentially delivered the opportunity to me and I'm forever grateful for it and have done my best to deliver on his confidence in me since. It's been about 30 years since that happened. It really gave me the break to manage. The prior businesses that I'd been a leader in were a few million in revenue. We grew that into a $4 billion company and took it public on the London Stock Exchange with 16,500 employees. I'm a pretty simple guy, my dad was the mailman, I never even graduated college. This guy gave me that opportunity and I made the most of it.
Clint Betts
That's incredible. Joe, thank you so much again for coming on. Best of luck with everything and I'm sure we'll see you down the road. Thanks so much.
Joe Walsh
All right. Thanks a lot, I enjoyed the conversation.