Marketing & Sales Innovators: Yext

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OK, I know a lot people think that Howard Lerman, founder of Yext is a jerk, did not invent anything, will fail, or, if you prefer add your criticism in Comments below. But hey, the guy just raised $25 million from some pretty smart VCs, including IVP (a Twitter investor--but please save the rants on that one as well for the moment). According to TechCrunch50 attendees, his demo left a judge "speechless" and resulted in a traffic jam at the podium of VCs trying to give him their business card.

So why does Dave think he is not a jerk?  Yext is already making $20 Million a year going after the Yellow Pages (YP).  There is not a more miserable example of old media trying to hang onto their water-soaked remnants of the past (has anyone out there ever received a dry YP on their doorstep?) than the YP.  Ever try using their website and get sent to the Australia YP instead of New York?  Real easy to happen, that one is. Yext is going after the YP's business with on-line ads for local businesses which generate real phone calls from people looking to use their services. Not such a great idea you say?  lots of competitors, right?

But do the competitors have the right business model? Perhaps not. At TechCrunch50, Yext previewed a pay-per-action, not a pay-per-click, business model, were the action is a relevant call that actually drives new business. I will spare you the technical details, but the platform sits behind the old-media sites like a mailbox and collects details on inbound calls for the business When a business signs up, Yext places ads in local YP websites--YellowPages.com, SuperPages.com, Local.com, etc. Responses to these ads flow through the Yext platform and are instantly available to the business for action. Wrong numbers, junk calls and (oops!) marketing calls are placed in a junk folder for the business to later sort through, just like Outlook.

Lerman is so confident that the pay-per-action model is the future for his business that he has switched all of his 20,000 customers over to the model.  That takes big you-know what's.

What's the downside?  First, Yext is only active in 12 local categories--like auto repair, chiropractors(that's a weird one), gyms, vets, and yoga, or .005 percent of YP categories. He plans to use the new venture money to expand categories, hiring sales people to go after key verticals. He also plans to be big in the mobile space and allow all sorts of apps developers to tag on new goodies.  The big challenge will come from the well funded, legacy players in this space, who will probably buy the guy out for $250 or more million and then sit on/not use/screw up the technology (think MySpace).  We'll see real soon on this one. Rupert, where are you?  This is a perfect space for you.