Katie Perry (00:00):
Have you ever wondered how global companies keep the long tail of their information on the internet, straight store hours, address updates, reviews, millions if not billions of dollars in revenue, rely on the accuracy of a brand's digital footprint and managing all of this is called Digital presence management. It is big business. Today we are talking with Mike Walrath, chairman and CEO of Yext, a company that does just that. Plus we're going to hear his thoughts on why AI is going to be different from the dotcom era that Mike came up in. So let's get into it. We have Mike Walrath here, who's the CEO and chairman of Yext. Mike, welcome to after earnings.
Mike Walrath (00:39):
Katie, thanks for having me.
Katie Perry (00:40):
It's great to have you here today. We got a lot of questions for you, but first to level set for our audience, what is Yext? What do you guys do? Where do you fit in the internet ecosystem?
Mike Walrath (00:52):
Sure. Well good, thanks for having me on. Yext is a digital presence platform. We help large enterprises, brands to manage the digital presence of their various stores, advisors, agents. Typically, everything that we do has some form of a geographical location-based bend to it. We have a suite of products that enable brands to manage from a data element and then distribute the data around all of their various properties, which in a generative AI world, is going to be one of the most important fundamental things that brands can do.
Katie Perry (01:29):
And I want to underline this for our listeners. It almost seems like what you do is something that you notice it when someone's not doing it right. If you're going to look up a store, the address is wrong, you show up. Correct. Or if there's a series of horrible reviews at the top and no responses, it's it's proactive, but it's also defensive at the same time.
Mike Walrath (01:53):
I think that's true about a lot of things, right? If you do it right, then the consumer just has a great experience and a great experience for consumer means I get what I want and I get it quickly and I get to the product or the service or the representative or the store that I'm looking for. And we've all had that totally awful experience where the store hours are wrong or the location has moved, or they don't have the products that we need or that I'm trying to communicate with an insurance agent or a financial advisor or a doctor's office, and they're not there anymore. And it's one of the worst experiences you can have as a consumer and in a world where the places that you find things is just fragmenting further and further every day. It's an incredibly difficult thing to create that seamless customer experience.
Katie Perry (02:42):
And on an individual level, it might be a minor frustration, but it seems like for a huge business, I know you work with five guys for example, if that wasn't happening, that's like millions of dollars of potential lost revenue in the short and near term. And so it's a business imperative. Seems like
Mike Walrath (03:00):
It's a business imperative, and there's a tremendous amount of work flow and work and workflow that happens in order for them to make sure that all of their, I mean for us, data is content and content is what drives viewability and visibility, and it's a really complex algorithm and there's a ton of work that goes into doing it. So the money that you leave on the table when this doesn't work is extraordinary.
Katie Perry (03:31):
And you brought up ai, which I think is really interesting in the context of search and organic search and Google. When you talk about ai, I know it's often there's how a company operates within AI and then how a company uses AI within the landscape of the internet and these generative AI experience. Why is having that baseline data accurate increasingly important for brands and companies?
Mike Walrath (03:58):
So if you look at this historically, so we created this company really in around 2009. 2010 was where the company as it exists today was launched and it was an answer to a fragmenting consumer experience. And that was largely being driven by the mobile device. So the mobile device became a search engine, and that search engine was geo aware. And so it created this massive escalatory problem for brands to make sure that everywhere that I might look on that device or on the web from a geographical standpoint, I could keep my information accurate. What we saw over the last 12 years was that we saw that it really distilled down to, in a lot of ways, Google, because Google became the place where 92% of all your traffic came from. And so we wrongly assumed that as long as your information was correct on Google or a lot of folks that was going to work, what we're seeing now is we're seeing a fragmentation.
(04:54)
So generative AI is bringing about a whole new way of asking questions and getting answers, and it's a different paradigm. And we've already started to see that Google search share is beginning to erode. And I think anyone paying attention sees that that's likely to continue. I think one of the founders, Larry Page I think is on the record saying, we'll bankrupt the company if we have to be a leader in ai. So whatever happens, the whole consumer search experience, consumer looking for information is about to go through a massive fragmentation and OpenAI search, GPT chat, GPT, Bing perplexity, countless others are going to chase this and it's going to make the data problem that underlies giving accurate answers through these AI experiences much harder.
Katie Perry (05:40):
So the underlying capabilities of these LLMs is tying to the accuracy of the data. And you're saying that original source of the data needs to be accurate so that wherever people are having these generative AI experiences, it's going to be accurate in real time.
Mike Walrath (05:55):
Yeah, it's really interesting. If go to chat GBT or search GBT and you ask it a question, where's the best hamburger in New York City? It's going to give you an answer and then you can ask it, where did you get this information from? And you'll be shocked at all the varying places that the information's actually coming from. And we all saw when these large language model experiences first came out, they were incredibly inaccurate. The language was amazing, it was a magic trick, but the answers were just made up. And so they're advancing really quickly toward giving accurate answers. And the way they're doing that, it's a little different. Some of them are plugging directly into other data sources. Some of 'em have their own search indexes. Obviously Google, Bing, apple, and has just launched a partnership with chat GBT. So they're all figuring out ways to receive and deliver information using LLMs, but the underlying core authoritative data of any given business or entity or individual needs to be provided as well.
Katie Perry (06:56):
And I want to turn to some news that broke this week that's getting a little buzz, and that's Klarna decision to cut some of their huge SaaS partners and try to build in-house. And I'm always curious people who are in the SaaS space, what do you make of that? Is that a bad omen or do you think this is sort of a one-off thing that one company's going to try?
Mike Walrath (07:19):
Yeah, look, I think we'll see. I think it's an aggressive approach, and I think we've all had frustration with software vendors over time, and I think there's a wave. There's clearly a consolidation thing happening and folks have probably overbought in a lot of ways. And so this is no secret. Software is having a difficult time now because the core enterprise is trying to digest all the software they bought. And we're doing as a company too, we're looking at the hundreds of software that packages that we use and we're figuring out how many of these do we need because they take time and resources to manage. So I think it'll be really interesting to watch and see how this goes with Klarna. I haven't heard of anyone else who's thinking about abandoning these platforms In a lot of ways there's core data in these platforms that building them yourselves. I'm not sure that's the most efficient way, but it'll be interesting to watch for sure.
Katie Perry (08:12):
Yeah, you feel for those engineers getting pulled off the core product to go build a Salesforce competitor?
Mike Walrath (08:18):
Yeah, I think it's a fair way to state it is everything, and I happen to be a capital allocation zealot. And so if we decide to build all this stuff ourselves, what are we not delivering to our customers in the corporate,
Katie Perry (08:36):
The consolidation, it seems like there's a few things at play, and it feels like a lot of SaaS companies feel like the needs of their clients are evolving, and so they're needing to expand beyond what they originally set out to do. I know you guys have e-commerce tools, things like that, and I'm curious how you think about broadening the suite of products you offer to have more value to your customers without trying to be everything to everyone. And that seems like a difficult balance to strike.
Mike Walrath (09:05):
I think it's probably the most difficult balance to strike because there's a very natural desire inside tech company to innovate. And one of the lessons that we've learned over time is that the customer always knows what they need, but they don't always know how we should solve that problem. And so striking the balance between really understanding what is it that the customer wants and then how do we deliver the solution to that problem is where I think the innovation engine really comes from. And if the pendulum swings too far to one direction, in the case of our company, it did. I think we swung too far to stuff that we really wanted to build that didn't necessarily match up with stuff that our customers wanted. So you have to find this balance, and the best way to do it is to ask your customers constantly, is our roadmap matching up with what you're going to need, tell you if it's not? And that's how you hit these air pockets and growth if you get that wrong.
Katie Perry (10:02):
I'm curious, who is the buyer of Yext at these enterprise companies? Is it the marketing head? Is it it? Does it depend?
Mike Walrath (10:12):
It depends a little bit. I think it's typically our first buyer at this point as the CMO or someone in the CMOs organization. But there's almost always IT involvement in the decision as well because you're talking about kind of core marketing technology stack. And so we have to get really good at articulating business value, but then also making sure that we can pass all the IT security regulation compliance checks. And our largest verticals are healthcare and financial services, which are highly regulated, highly compliant, compliance oriented businesses. And so we do a lot of co-selling across different functions inside the organization, which makes the sales cycles longer and more difficult. But obviously once you're in your stickier, which is good.
Katie Perry (11:01):
And you guys recently reported some earnings. Give us a quick breakdown. What did you share? Where are the points of progress and where are the areas you're focused on in the remainder of this year and into 2025?
Mike Walrath (11:12):
Sure. Yeah, we reported our earnings last week. I think we had a really strong quarter. I think it's tough out there, and we've talked about this a lot, particularly in software because the enterprise is trying to digest all of the digital transformation software that they've bought over the last 10 or 12 years and really figure out where do these pieces work together. So part of what we've been very focused on and talking a lot about is that we believe that our customers want broader, more breadth in their platforms. They want an underlying data platform that's going to enable them to use generative AI and other AI features and functionality in their, and at the same time, we think that that's probably going to take longer than most have assumed. And so I find it to be an incredibly interesting time to be executing in the software space because great execution will be rewarded in this environment. And nobody knows when AI becomes a tailwind in a meaningful way for software. And I refuse to make predictions on when that will happen other than it's not happening right now.
Katie Perry (12:19):
And you were at the ground level of a similar wave being the early ad tech internet marketing space late mid two thousands. Does this sort of feel the same as that time when things were really ramping up? There was a lot of hype, but it hadn't really taken off in the way that it did after that.
Mike Walrath (12:41):
And so I started my career in New York in 1999, sort of peak froth of the internet bubble. And at that time, I think we thought we were there. We thought that the internet was going to, it was changing everything clearly, and people said crazy things like the internet's going to destroy commerce. And obviously the internet's done nothing but accelerate commerce. But what's amazing about it is that these timeframes in 1999, we were sure we were there and then it wasn't for another five to 10 years before the internet really felt mature and the paradigm shift had happened. So I have a lot of confidence and I already talked, I mean, I talked about the mobile revolution in 2010 that was a similar drive, drove a similar adoption change. I think generative AI is very similar. We know it's going to change everything. A year ago, everyone was talking about how it's going to change everything right now, and now it's very clear that it will take longer than we thought. But I think it's also very clear that or it should be clear, if you've paid attention historically, it'll probably be even bigger than we think it is the impact that it has.
Katie Perry (13:49):
The interesting thing about the digital advertising space was back then it was like a small sliver of media budgets and now it's almost like you don't even need to say digital, it's just that's how it is. And do you think AI is going to be that way where AI is just going to be how businesses are built and run? It's not going to be this, look at this thing over here, it's just the foundational element of how business runs?
Mike Walrath (14:14):
Totally. Yeah. I think there was a time when we talked about how we bought something. Right now we just buy things. I think there was a time when I remember this clearly when I started my first company, when we measured the digital advertising market in single billions of dollars. I don't know what the number is today, but I know it's a hundred x that we used to talk about it as we used to try to convince people in investor meetings that this was going to happen really fast. And on a relative basis, I think it did happen really fast. But when it comes to ai, I do think it's just going to become part of everything that we do and we'll stop talking about it so much, but the magic of it will start to become part of everything. So I think this idea that AI is going to kill software has been totally overblown. There may be certain areas where in productivity and workflows and things like that, it disrupts, but when it comes to how do you deliver core experiences to customers, everything's going to be touched by it and it's going to improve it.
Katie Perry (15:14):
Yeah, it's almost as if when something loses that luster and just becomes the normal thing, that's when it's huge.
Mike Walrath (15:21):
Yeah. You stop talking about it and you're just living in it. And that's not going to happen next year or the following year, even though that's what I think people want because it just drives these waves of change that they drive commerce, they increase bookings, they increase revenues. We get these massive growth engines probably around the time where people start to give up on it is when we'll start to see the impacts of that.
Katie Perry (15:45):
And I want to shift to something you brought up on earnings but also ties into, I know you've multiple companies you've founded Run, so I want to get into your head space as an entrepreneur on the call. And in the past you've talked about this acquisition of a company called Hearsay. Can you quickly tell us why Yext acquired Hearsay and also how that sort of melding of two companies and cultures is going?
Mike Walrath (16:13):
Yeah, so we announced in June that we were acquiring Hearsay. It's a company we've known for a long time and had a lot of respect for, it was a company that we were ultimately trying to figure out, do we need to be in the business of compliant social media, compliant lead generation compliant communications, which is what hearsay, they really invented that space for financial services and they've been a leader in that space for the better part of the last 10 or 12 years, or do we compete with them? And I think what we heard from our customers was you have to do this. And as we dug in further, we realized how far ahead that they were and so it became a natural discussion. I think a big part of the driver of the deal is that there's this amazing cultural overlap between the companies.
(16:58)
We service very similar customers. We solve very similar problems without being in competition with each other. And the companies have some similar history. We both created a category. We've both kind of had the hero's journey. There've been some tough years over the last couple of years and I think both companies have emerged much healthier. And so it's been an amazing, it's all moved very quickly. We closed that deal on August 1st. We're in the process of fully integrating the team. We had a lot of the team here in New York yesterday and last week, and it's been awesome to meet so many of that team and really see how everyone's working well together.
Katie Perry (17:30):
Your previous company, right? Media really pioneered digital ad exchanges. And as we were talking about earlier, these are the underpinnings of the internet that we don't see the pipes as a consumer, we just see the ads, we see how things are appearing to us on the screen. And I want to talk about the growth of that business. I know you're acquired by Yahoo. As a founder at the time, what was that like building a business, growing it to a medium size and then entering this behemoth that is Yahoo?
Mike Walrath (17:59):
Yeah, it was really interesting, the whole experience. I mean, I was not really trained for this. I was an English literature and composition major. Turned out I was pretty good at selling, went to work at DoubleClick and at DoubleClick what I saw was the inefficiency of the way that we were buying and selling media. And so went a little crazy and decided to go hang out a shingle and started this company, right? Media and then it just exploded. I think we were ahead of the curve in terms of what was going to happen with trading digital media. My kids still yell at me, so every time they go on, we were one of the first companies, I think we actually pioneered the technology to remarket to site visitors. And so my kids still yell at me when they go to a shoe site and then they get followed around by ads from that site.
(18:48)
And so there are always things that last even beyond the lifespan of a company. The end of that working at Yahoo for two and a half years in a lot of ways was this incredible gift because I had never learned how to really operate at scale. And so suddenly being thrust into an environment where I was running the global ad marketplaces there and had thousands of people on the team and had to figure out how to manage the global team and things like that, turned out to be a great training ground for what I'm doing today, 12 years later running a global public company. So the whole journey journey's been unbelievable, unexpected and just awesome,
Katie Perry (19:26):
By the way, for people listening, remarketing is huge. That was such a game changer and I think we notice it, but it almost feels like over time you don't like it until you like it. I wander on a page and I get distracted and then boom, it's right there and
Mike Walrath (19:46):
Then everywhere you go, it's there. It does have a little bit of that. And back then, I mean you're talking about in 2005, 2006, there was definitely a little bit of a creep factor to it. People come very accustomed to it, but my kids do yell at me about it.
Katie Perry (20:02):
I mean the internet overall, back then I was like an 11-year-old in chat rooms on a OL doing God knows what. So it was the Wild West. There
Mike Walrath (20:11):
You go.
Katie Perry (20:11):
And now all of these things are normalized. And on that note, I'm curious, what do you make of the whole cookie debate that's going on? I know Google backtracked in their plans to deprecate the cookie. I guess quickly tell people what a cookie is because some people maybe just see the pop-up box and then they're like yes or no, and what's your opinion on all that?
Mike Walrath (20:34):
Yeah, so it's interesting. So this was a huge thing when we built right media because it was the sort of foundational to the way that media was bought and sold and the ability to anonymously attach a browsing history and other things to this cookie file, which is really just a file that sits in the browser. And so it was super foundational to the idea of all these concepts, real-time bidding and remarketing and all these things. What's interesting, I don't have a strong opinion on the cookie stuff today because we've kind of shifted and where I sit today is more sort of core first party digital presence management where the cookie doesn't play a role. So a lot of my friends who've stayed in the hardcore ad tech world have really strong points of view on this, and this may be just a little intellectually lazy, but because it doesn't impact us within our core business, I actually don't think that much about it.
Katie Perry (21:30):
I think that's fair. I think that's completely fair. I want to ask you, in researching for the show, I think I saw that you're a filmmaker. Is that accurate? It
Mike Walrath (21:43):
Well, that would be wildly overstating my contribution.
Katie Perry (21:48):
Okay. What is your contribution to film? Tell us a little bit about that.
Mike Walrath (21:52):
So someone who I grew up with, a very close friend of mine went to high school with. We happened to be neighbors when we first moved to New York City in the late nineties, and she was actually just had just finished up at NYU and was working for Barbara Walters at the time. And we used to sit around and we would drink really cheap wine and we would talk about making movies. She would talk really about her. She wanted to make movies that mattered one day. And so after right media and finishing my tenure at Yahoo, I was kind of taking a breather and we got to talking about it again and we launched a company called Atlas Films, which Stephanie Ti is just a remarkable filmmaker and entrepreneur. She runs the company, she makes the content, she kind of does everything. And I sort of like many things in my life, get more credit for it than I deserve.
Katie Perry (22:42):
A very humble answer, but that's very cool, and it reminds me of you brought up your English major, I think I'm also a liberal arts kid, and I know there's a lot of discussion on like, oh, it's a waste of money, but I'm always saying what I learned on that path was not core business principles, but sort of how to think. And I'm curious for you giving advice to future generations. Would you recommend that path? Do you regret it now being where you are, or do you think that was ultimately something that perhaps gave you an advantage and led you to your success
Mike Walrath (23:19):
Today? Yeah, so I've been involved in some of the university level higher ed. I've sat on a university board. I think it's kind of a hot button question today. What I go back to is that I had a great experience. It opened my mind in a lot of ways. I took courses that were interesting to me, so I had a English literature and composition major and a Russian literature minor. What I would do differently if I could go back is University of Richmond where I went to school, had one of the best undergraduate business schools in the country, and I quite literally never set foot in the building. And so I would have, if I could go advise that 18, 19, 20-year-old that would be just walk into that building and take a couple of classes, understand how this world works, I really had no understanding of how any of it worked until I got into it. But I also think everyone's on their own journey, and I say all the time is if one of my kids didn't want to go to college, I would be fine with that if they had a plan.
(24:26)
The only plan you can't have is I'm going to do nothing. And so I think we all have to find our own paths and our own journey. And mine's been a little unorthodox, but I think a lot of them have
Katie Perry (24:38):
A love that I similarly went to a school that has a good business program. I was at Notre Dame and I maybe walked in the building once to meet a friend, and now I'm like, oh, I should have probably maybe took an accounting class. But we all get to where we're going no matter what. So it all works out
Mike Walrath (24:55):
And all you have to do, if you want to understand accounting and just ask Jet GPT, it'll tell you all about accounting.
Katie Perry (25:00):
Yeah, I mean, it is wild now. The opportunities for just self-development using these tools, it's actually incredible. So that's also a good nugget for our listeners.
Mike Walrath (25:11):
There you go.
Katie Perry (25:12):
Alright, Mike Ra, CEO and Chairman of Yext, thank you so much for joining us today, sharing insights into your company and your career. We really appreciate it.
Mike Walrath (25:21):
Thanks for having me, Katie. It was great.
Katie Perry (25:23):
There you have it. Always good talking to a.com era og, especially in the context of the current AI hype cycle. I really appreciated Mike's candor in talking about the challenges facing SaaS and how companies are balancing doing the job they set out to do while expanding their offerings to show more value to buyers. As Mike calls out, this is quite the tight rope to walk. How do you assuage the CFO that you're not wasting money while also not losing sight of building what you actually set out to do and what you're great at? This is going to be a huge topic for SaaS investors to follow in the coming quarters, and we look forward to exploring that topic with you further on future episodes. I'm Katie Perry. Thanks for tuning into After earnings, the show that brings you up close and personal with the executives behind the world's most interesting publicly traded companies. If you learn something today, don't forget to like, subscribe and share with your friends. Upcoming episodes will feature CEOs and CFOs from a major semiconductor player, one of the world's largest pharmaceutical companies, and more.
