Today we announced that WGI Group led the 10M Series D financing for Yext. This is WGI’s 3rd investment in Yext, and the company is our largest holding by a wide margin. When Jonah and Noah Goodhart and I founded WGI Group a few years back, we weren’t necessarily envisioning making larger late stage investments or multiple follow-ons like we have here. Our focus was on making very early stage investments and co-founding companies. But more than anything else we wanted to find companies that are positively disrupting very large markets, and sometimes you find those opportunities a little bit later in a company’s lifecycle.
A few years back when Howard approached me about investing in Yext, some things were clear, others were not. One thing that was clear was that the management team at Yext was whip-smart, extremely passionate and driven to do something big in the local space. They had built an ingenious pay-per-call product to address the market needs of a couple hundred thousand small businesses, and they had executed very well against this business plan.
What was less clear was how this was to become a very large business, or what the big opportunity was in a highly fragmented and chaotic market to service the needs of local businesses on the web.
Nonetheless, it was an easy investment to make. The team was amazing and attracting great talent. Their first product was a hit. It wasn’t a grand slam, or even a home run, but it was a solid first effort that spawned a very real business. It was not hard to believe that this team would find the bigger opportunity. We dove in. When offered the opportunity to invest again less than a year later, we didn’t hesitate. The second investment made Yext our firm’s largest holding.
At some point about a year ago Howard and I had our first discussion about me getting more actively involved with Yext. That discussion culminated in me becoming chairman of Yext – a position I feel privileged to hold. Getting to spend more time in the office and with the team gave me insight that an investor and board member never could have. What I’ve seen over the last year is something that very few people ever get to see.
Over the last 12 months I’ve seen the expertise and passion of a very smart and talented group of people breathe life into an incredibly innovative and disruptive product that will fundamentally change the way local business listings are handled on the web. I’ve seen a market opportunity that was several hundred thousand customers in the United States grow into one with 20 million prospective customers – just in this country. More than that, I’ve seen the product built, launched and thousands of paying customers LOVING the product.
Huge problems create huge market opportunities. The huge problem here is not obvious, until you steep yourself in the local listings space for a few years.
Local listings are getting more fragmented by the day, with new websites, mobile apps and services that contain local listings appearing daily. This is challenging for local businesses of all sizes. How do you make sure you can be found when there are so many different sites, devices and services where you need to be visible? The key problem here is that local businesses do not control their own data on most of the sites they should be listed on.
Local business listings are the fundamental building blocks of marketing for local businesses – and they are completely broken today. Yext is solving this problem. Without disclosing too much, the solution to that problem involves giving local businesses complete control over their listings across a broad (and growing) set of partners. Further, websites with local listings need better solutions than paid access to highly inaccurate and out-of-date databases of local information.
Yext is already solving this problem for thousands of local businesses and dozens of local directory services. It is working, and it’s going to revolutionize this market.
This is what investors and entrepreneurs dream of. The team, the market opportunity, the product are all there. I’ve been fortunate enough to be part of companies where these things have aligned before – it is truly amazing to participate when it happens.
And that’s why WGI led this latest financing, investing for the third time in Yext. And it’s why I feel so lucky to be chairman of Yext and get to be part of this ride. I recently told someone that I think Yext is going to be one of the largest technology companies ever created on the east coast. They laughed at me…and I don’t blame them. But they haven’t seen what I’ve seen here. And while there is still an extraordinary amount to do, and at this stage you never know what’s going to happen, I stand by my prediction and can’t wait to see it all play out.