Name: Brainstorm Tech 2024: A New Generation Rises In Silicon Slopes
Uploaded: 2024-07-16
Duration: 17 min 19 s
Description: Adam Edmunds, Chief Executive Officer, Entrata David Wright, Co-founder and CEO, Pattern, Interviewer: Andrew Nusca, FORTUNE

Adam Edmunds, Chief Executive Officer, Entrata   David Wright, Co-founder and CEO, Pattern, Interviewer: Andrew Nusca, FORTUNE

Brainstorm Tech 2024: A New Generation Rises In Silicon Slopes

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Hi guys. How's it going? It's good. I'm still acclimating to the altitude to be perfectly honest with you. Yeah. Yeah. Yeah, it only takes like four weeks. You'll be fine. Four weeks. Oh, great. Well, good. Alright, I have 3.5 weeks to go gentlemen. I said a lot of jargon at the top about what it is that you folks do and I would actually like for the benefit of the audience for you to explain your companies. So Dave if you don't mind starting what is an e commerce accelerator for the normals in the audience? Yeah. Thanks for having us on first off. Yeah. So e commerce acceleration, we essentially built the category. We help brands sell their products wherever in the world they want them sold marketplace wise. So if you're a brand sitting in, you know, New Jersey, which I'm flying there on a Redeye tonight to own a big brand in New Jersey. And they've got an Ecom team generally, you know, 10 people or something and they have to tackle global Ecom which would include China. We have a couple 100 people in China. We have people all over the Middle East people all over Europe. And if we can do it at a margin that they can't do it at, there's just no reason why not to use an e Commerce accelerator. And, and so if you're a brand looking to sell your products globally on marketplaces, then that's who you'd partner with as an Ecommerce accelerator. Got it. And then similar view out of property management software. For who? For what? Yeah, we're probably the biggest enterprise software company. No one's ever heard of in here. We're about 20 years old based here in Utah. Um We build, we're a vertical SASS company. We build software for multifamily property management businesses on the enterprise site. So if you have 1000 units or more, you're a target customer for us. About 2500 people. Um About 1000 of those are engineers, uh just crossed 400 million of a RR. Um, the company was bootstrapped for several years, raised some money a few years ago, brought in a few investors. But um yeah, people always, most people have never heard of us. We, we, we, we're kind of the of the radar. All sleeper. Yeah. Yeah, gentlemen. II, I just wanna level set for everybody could, could you please very quickly just explain what your revenue looks like right now and how much money you've raised because it is really extraordinary amounts, Adam if you don't mind. Yeah. Uh so this company raised a million bucks. In 2005. That guy still is on the board owns like 15% of the business. So he's gonna do, ok. He'll be all right. Um, we, and then never raise money again. I came in to the business about 2020 as CEO we raised around in 2021 of five, a little over $500 million a lot of that secondary. Um, we brought in Silver Lake, uh, Dragon Air and then a couple of local Ceos Ryan Smith and Todd Peterson also, uh, he, he helped out with that round. Um And that's what we've raised. The company's always been break even slash profitable. I mean, that's the only way to be, um, bootstrapped for so long. Sure. Sure. And your revenue, did you say revenue? A little over 400 million of A R and like always been profitable? And thank you very much. Yeah, we started in 2013 and, and because my background wasn't in, you know, building a business or finance, I did, we never raised money until 2021. We raised 52 million at that point. We in total, we raised 277 million. We did 1.3 billion in revenue last year. And this year we'll do 1.8 right? So thank you for that. So we're talking about fast growth. A lot of, a lot of heads you both have, uh uh uh on your teams. Tell me a little bit about the environment that we're in. What has been a challenge for you in this economic moment. Uh, what keeps you up at night? Uh, uh, you know, you've raised a ton of money that, that's not free. Tell me about it. Uh, yeah. So for us, you know, we built the apartment industry so they've been facing major headwinds the last 12 to 18 months. Rents have really kind of stabilized, decreased in a lot of markets. You know, these owners are on, you know, underwater in a lot of the loans that they have mortgages that they have on buildings. So, um, luckily we sell to the biggest customers in our space. So they're super acquisitive. Um So that's, that's helpful when they go by other companies, it's just automatic growth that comes to us. But we're, you know, we're starting to see that turn around. I think as the fed starts to drop rates that's gonna make life a little easier for our customers. Um I've found over the last year or so. I think if you're profitable, if you're a big company, I don't know if the funding environment ever went away. People definitely got a little more evaluation conscious, I'd say over the last year or two. But, um, you know, I, I if we wanted to go raise around, I think we'd, we'd still have quite a bit of demand. Um Are you worried about getting over your skis? Given the the environment for your customers. Um We sell to a space that's always going to grow. It never grows super crazy. So getting out over our skis is, is would be pretty difficult to do. This company just will grow at 25 to 30% a year for a long, long time. Um So for us, it's just about, you know, maintaining efficiencies, you know, expanding globally, but being really smart about it is what we think about every day. Yeah. Saying, you know, we, we're lucky because we're in digital, you know, digital commerce. So as people move from brick and mortar, which is probably 78% you know, at least in the US, 78% uh 22% is digital and, but it's growing every year. So we have had slowdowns. I think the consumer, you know, and there's concern there. We don't feel it that much because there's generally as much that moves from brick and mortar into digital. So, you know, I think through the years of almost every tech company in the valley did, you know, layoffs, we managed to avoid that and I don't expect we ever will have one unless we, you know, can't forecast. But even if we get a little over our skis, we sort of the, the tailwinds help us grow out of it. I see. Yeah. Just being in the, in the space we're in now you both have interesting personal journeys as far as how you got to the place that you are now, you have strong feelings about the founder versus Operator debate. First off, I'd like to know where you land on that one since you've done both and why Dave, I think founders and Operators are can be the same. I think Adam and I are probably both more on the, you know, I, I founded the company but I think my natural skill is just running a machine where I think I've probably had the most tension is the investor founder, you know, tension. I think there's a bit there. Um Oh, do go on. Um We've had one great 11, not so great one, but generally it's just hard I think and you can see where they're coming from, but an investor comes in and they're like, we're long term, we're thinking five years from now. But in order to monetize something in five years, they're thinking we need profitability now. So a lot of the changes that we're doing are to set up a cell in 3 to 5 years. And that's a long term view, maybe seven, but mostly founders or deep operators are thinking, you know, 1020 years down the road and that is hard to bridge. And I don't know, you know, and generally, you know, a group of investors are holding the CEO accountable and if he doesn't hit certain numbers, he's going to get fired. So he causes them to do things in the short, him or her to do things in the short run that wouldn't be best for the company. So luckily, you know, me and I, who's our co founder, we own, you know, 60 70% of the company and we have investors, but we largely just say we're just holding the, you know, and there has been a lot of rigorous debate because we run a very slim margin because we have, I feel like it's better for brands and better for a pattern. But oftentimes, you know, so we grew a brand from 8 million to 324 million, for example, across global marketplaces. So our, our investors say things like if you grow a brand from 8 million to 324 you can charge them anything and we charge them, you know, 3%. And, and so that's generally the debate that we get is, but I just think it's better, long term thinking if you look at all of the companies in retail are in those spaces, they win by having the best service at the lowest cost. You do both. I wish I was a founder because then I'd own 60 to 70% of something doing 1.8 billion in revenue. So I started to, they were OK. The first one we sold for 10 million bucks. The second one we sold for 70 million bucks. Founders are psychos though like they care about everything. And they're like founders are psychos, they're psychos in the best way. I've worked with some of the best and I'm just my love language is like a metrics and customer acquisition cost and raising money and board meetings. So um after that, I went to a company called Podium. I was super early. We went from like wonder love languages, board meetings. OK. I'm just asking, this is, this is like coming. All right. No, like so the last company I was in, we went like 1 to 100 million of a RR raised money from like Excel and Google. Just lots of emotions and craziness. But now I'm in this big boring silver Lake private equity world and I kind of like it. There's no emotions, they get caught, they, they say they're financial engineers. That's great because they just, if you can see it in the spreadsheet, it's great. So II I actually wish I was a co founder that owns 60%. I am an operator, a big boring operator and I've just come to accept that. That's what I am and I'm OK with it. I'm gonna get you a mug that says big boring offer. Thank you. Thank you. I'm gonna come to the audience for questions in just a minute, but I've got one for you. So um you're both actually in Lehigh, is that right? So, um you know, we, we've talked on this very stage before last year about you know, the Silicon slopes environment. Um The pros, the cons, I would love to know from your perspective as operators in this environment, how has being in this region helped your business and how has it held it back? Um I, I'm happy to go first. So I started in 03, my first business and it was hard back then in Utah, like you mentioned, Qualtrics and omniture. This company was bootstrapped plural site. They were bootstrapped because you couldn't raise money here. Um The other thing that was really difficult is you couldn't find execs. Like if you, 10 years ago, if you needed a CFO that had taken a company public that did not exist in Utah, you had to import them from the Bay Area. That's changed quite a bit. What we've always had is really good, go to market talent. We've always had really good engineering talent at, you know, it used to be like 50 to 60% of the cost of the Bay area. It's crept up. We've still maintain that. But what's been nice is we've had enough of these companies that you've mentioned, get at bats in the public markets and big equities and multi billion dollar acquisitions. So the talent pool is really rising. So now I really think it's a huge competitive advantage to be here. We can get the talent, we need the execs, we need, you can raise money from anybody here. Times have changed. Yeah. Yeah, I mean, it's, it's tough sometimes in Utah and I, and there is a stigma to Utah and some of them are true. You know, I think being, you know, I'm not LDF but the, which is the predominant religion in, in the, in the region. I think there's been a lot of history around that and a lot of it, you know, a fair, you know, assessment of, of, of Utah, maybe some things to look at. But from running a company, the talent is there. And if you love being outside, so the people we bring in, it's like a little bit of a love hate relationship when they come in and they land in Utah, they're like, I love this place and I will never move. That's how I feel about it. But I love to go outside. I love to hike, I love to fish. I love to run. I love to bike and I can get on a biking trail and I can go 20 miles up the canyon and never get off the bike, the trail, right. You know, so that I think it is nearly impossible to find. I don't know any other place where you can go and park and be in the mountains in seven minutes with your car. You know, that's from our, both of our offices largely. So a lot of advantages. But we do have occasionally, you know, the, you know, the person that comes in is like, you have to have a car here. Like I can't walk. No, you cannot, you know, you two miles to probably the closest store from most places, you know, but if you want to park without paying for parking or, you know, and you just drive up to the store, you get out of your car, you walk in, you get like, you know, it's fantastic. So, I think, and the talent is here, I think it has a, you know, people think it's, you know, you maybe need to go outside, but I think not anymore now we still go outside quite a bit for, because you have to be global, I think to win now. So, you know, we have 100 we have more people outside of the US than we do inside. But uh but I think every company has to do that to win now, certainly at the scale that you're facing. All right, let's go to the audience for questions. Any questions for the gentleman here. Any questions? Yes, back here. Please just wait for the mic, your name and your affiliation. Sure. Jason Del Rey from Fortune. Um I have a question for, for David. Um So I've covered Amazon for a long time. Um They have these policies about how they want brands to work with them. Sometimes they enforce them, sometimes they don't, they decide when they want to, that can really up in a business like yours or others in the ecosystem. How do you deal with that? And how do you sort of educate your employees to deal with that? I mean, we've been at it for 11 years so we've dealt with probably every policy change or wind of change that Amazon has done. And of course, we've had our moments where we've woken up and we've thought we're dead. Um But as over time, we've just come to realize if you provide value, you know, we're deep, deeply great at helping a brand on the technology side and have such a great track record. I just got back a stat from Amazon last week. This is from Amazon pattern is beating brands that are non pattern managed on the platform by two X and six X in in the health and personal care space on page views. So that's all just a tech. And so regardless of how Amazon decides to set up, you know, the model one P three P, however, they want you to move the goods and they change that. It doesn't really matter at the end of the day to winning because Amazon is always going to focus on the customer. So as long as a customer gets a great product at a good price and we can help that happen. It's all keyword, keyword phrase based from a machine learning perspective, then you will always have a job and pattern will always exist. The revenue models might change, those have changed over the years. But you know, we've come to care about them less as the years have gone on because, you know, we're on T mall in China, for example, those change all the time. Rakitin in Japan, you know, so it almost, you know, we support 70 marketplaces in 60 countries and they always have some new way of doing something. You almost have brands have to just adapt. Thank you. We've got one more. Yes. Your name and affiliation, please. Yeah. Uh Bank Bar then co founder and CEO of NANA, where we're a health care at home remote diagnostics company. I love the topic on the founder versus operator. I'm a first time founder. Uh but I think my skill set was always an operator beforehand. How do you guys see that skill set from the founder and maybe separately the operator of the blend changing now 2024 onward where a lot of those skill sets from the past are now being automated. They're being augmented or evolving from technology and you may not need those old skill sets like you did in the past. Just curious on your thoughts there if you can answer briefly. Yeah. Um I think it's hard to find someone who could scale founder to operator like a dollar to a billion dollars of revenue. Like Zuckerberg's maybe one of the few who've done it really, really well. It's hard because when you're small and you want to be a psycho and make every decision that those same personality traits as you get bigger will, will push every good executive you have out the door. Um And I don't think that has changed. Um, so I think, I think it's a really hard transition to make for a lot of founders. Um II, I personally don't know a lot of, a lot who have done it. Super Bowl. OK. I'd say that it's almost a misnomer because there is operators. But at the, at the end of the day, the people who operate things really well, companies, they're good at letting go and letting people do it. Because if once you're a founder of, you know, the 1700 people at pattern, no matter how good I am, I'm not running that machine. I might think I'm running the machine, but in reality, I'm not running the machine. And so if you can hire well and treat people well, have a good work life balance, build a machine, build a good culture. You're going to be a great operator. That's almost, I think how you define it. Even if you're not in the details, someone is who's great. Right. Right. Right. Well, gentlemen, I have one last question for you before I let you go. Um Are we expecting, I mean, I know the environment, economic environment is what it is. But are we expecting any uh liquidity events in the near future? Adam? Um We are preparing to be a public company. I think this will be a great public company for a long, long time. Timing is TBD. Yeah, same, same. All right. You heard it here. First, a round of applause. Thank you gentlemen for joining us today.