Mediafly’s Chief Financial Officer and COO John Evarts moves fast. And, he has too. Because the Chicago Tech company is growing rapidly, redefining B2B sales and marketing. Oh, and Mediafly just raised $10 Million.READ FULL TRANSCRIPT
Today’s guest is John Evarts, he’s the Chief Operating Officer and Chief Financial Officer at Mediafly, one of Chicago’s fastest growing tech companies. Why don’t we start with telling our audience a little bit about yourself and a little bit about Mediafly.
So, my name is John Evarts, I’m Chief Operating Officer and Chief Financial Officer for Mediafly. We call ourselves “the evolved selling platform,” essentially, we like to deliver breakthrough results for our customers by building beautiful technology that delivers real time interactive insight in every meeting. So, we want to be the evolved selling platform for all large businesses that have a distributed workforce, that include sales people and distributors, so a lot of very large companies use Mediafly as the last mile when they’re in the selling motion and in meetings to deliver the perfect meeting, we say we bring meetings to life.
So, it sounds like Mediafly has had some good years as a startup, can you talk a little bit about the role and maybe even the pressures that come along with being the COO and CFO in this period?
I was lucky enough to join Carson Conant, who’s the Founder and CEO around 2010, and since then we’ve been able to kind of navigate some tough recessionary times, but also essentially build what we feel to be a really strong player in an enterprise software market, which is not easy to do. So sometimes it’s interesting. I wear two hats, so I wear a Chief Operating Officer hat, which is much more strategy, long play, so things like, how do we kick off the analyst relations? How do we look at marketing? How do we look at strategic partnerships? How do we focus on improving our valuation? And how do we raise capital? And that then kind of translates then into the next piece, which is essentially a resource deployment.
So, I get a chance to look at strategy. I get a chance to look at things like, how do we use the resources that we have at our disposal, whether they’re human resources or financial resources, and then try to put those in such a way that we’re able to maximize the value of the company daily. So, I kind of see the marriage of the Chief Operating Officer and the Chief Financial Officer roles really as the intersection between those two pieces. One, I’m thinking about strategy and then two, how do we do everything we need to, to have the appropriate resources to be successful and grow. And Natalie, you mentioned that we’ve been growing quite a bit, and I’d say, “Yeah, we’re lucky,” so we’ve been able to work hard to put ourselves in a position where Ink Magazine has recognized us, the last four years now as a high growth organization and included us in the Inc. 5000.
Let’s keep talking about that for a minute. AE Marketing Group is also an Ink 5000 company. We’re not at four years yet, that’s incredible growth. You just talked a little bit about the pressures and the big hats you wear as COO and CFO. Talk about just managing that kind of rapid growth the last four years. What’s that’s like?
Sure. It’s interesting, it comes in waves. So, what I find is each different tier of revenue comes with different types of challenges. And sometimes it’s product related in a maturing product, and we’re lucky that we have an amazing development team led by our Chief Technology Officer, Jason Shah and prior to that led by Carson the CEO and Founder. And I think their leadership and Jason’s leadership now, has really pushed us in a position to first focus on delivering a quality platform and delivering a enterprise platform versus serving any number of masters. I think focus was really the first push that was necessary to get us into that first hurdle. And then starting to productize and starting to identify. Now that we’ve got a product that people are asking for and people want, how do we really sell it? How do we package it in such a way that allows us to start generating revenue in a more repeatable fashion? So, you have the idea, you have the concept, you’ve now created this product that people want, so you’ve identified what I know a lot of people call “product/market fit” or at least initial phase of product/market fit.
So, your next piece really is focusing. So how do we grow our business? So, once you have something that’s repeatable and you have a product that you can take to market, the next phase honestly is infrastructure. How do you put the infrastructure in place so that ultimately you can support what hopefully will be an opportunity for growth, right? How do you put the necessary, honestly HR and compliance and legal pieces in place, and policies in place, so as you hire people you do it the right way? As you bring on customers, you do it as close as you can to a [chuckle] less customized contract, right because everybody knows especially if you’re in enterprise, lots of times you’re working from other people’s paper. So that’s one of the challenges is how do you understand the give and take related to those compliance and legal aspects, and that all comes with infrastructure. And then finally, how do you source the capital that’s necessary because lots of times you want to be investing ahead of revenue, and to do that you need to have access to the capital at the right times to drive that.
When you first hear marketing, what comes to mind as a CFO?
Honestly, spend money to make money. My focus really there is how do I provide the resources that are necessary for marketing to be effective? We need to communicate a consistent and compelling message that’s differentiated out into the market, so that when customers think about us, they’re aware of what’s going on. I think I’m a little atypical in my CFO-ness, although maybe I’m not, but the way I think about it is, “Okay, so what is the right amount of capital to deploy for marketing initiatives to ensure we’re maximizing that spend, but also we’re spending enough to drive revenue, to take the next step?” And so, when I think about marketing I really think about a military term “air cover.” Ultimately, it’s critical for you to get the message out, for it to be consistent and compelling and differentiated, and there are efforts required to get that out there.
So, thinking along the lines of practical advice for our listeners, tell us about some of the ways you’ve figured out to help marketers and finance improve their working relationship?
From my perspective, I need to be able to be effective. The best way for me to do that is to have a partner. And so, I look at the Chief Operating officer and the C-suite, I look at those as partners. Honestly, I look for my position essentially to be a service provider to them. I think my job is to provide them with the resources they need to be successful. And so, while yeah, maybe I have a little bit of opportunity to nudge where I think it’s necessary, the reality is I want to be a partner and I need them to be a partner with me. So, communicating effectively, telling me what I need to know and honestly as few surprises as possible.
But I feel like as long the communication structure is there, it really allows me to understand why we’re spending the way that we are, because ultimately in the marketing side lots of time it’s spend. It’s spend to drive first activity and then ultimately, revenue. As a startup, that’s one of the things that’s hard to get your mind around as a CFO is, “Look, I’m funding activity at least to start, I’m not actually funding revenue.” It’s hard to translate that because our sales deal cycles are so long. If I’m doing my job, I’m helping identify what are the key metrics that we want to have in place, I’m helping to identify here’s the spend that we have and, when necessary, adjust that and to communicate those adjustments, positive or negative, but then also get and feed and be an advocate for the information that the marketing officer or chief marketing officer is doing.
When you’re in a start-up, you’re always constrained by resources. So, you must be smart in how you deploy them. The way that I look at it, and I give attribution for this concept to Jim Holtzman, who’s on our board of directors. He talks about making small bets and seeding small bets. And then, once you have seeded enough small bets, you’ll start to see some pan out and some not. And so, what you want to do is as things start to pan out and you make small bets, say analyst relations for instance. You break the pay-wall with an analyst firm. That analyst firm then provides insight to you. You gain mind share. Then maybe then you gain a little bit of influence. And then maybe you’re included in a report. Then you double-down. You always must be making bets, and you always should be comfortable that some of those bets aren’t going to pay off.
But if you’re disciplined and you’re regimented in how you deploy that capital, and you do it in a very meaningful and smart way, the reality is your exposure is minimized and it allows you to then redeploy resources in things that start working. So, for us that was outbound calling, when we were ready for it. It’s analyst relations, when we were ready for it. And this year, one of the things that we’re starting to see is by investing in the marketing team, and events, more specifically, a ton of focus on events this year. It really allows us to take advantage of what we see as an opportunity to grow leads, to grow opportunities, and for Mediafly to grow. And so, as we think about seeding them and then starting to see them kind of grow, and come to fruition, and kind of bear fruit almost, is now you’re starting to see, “Okay, I make a small bet. I double-down. I keep investing. And suddenly, now I’ve got a very successful initiative that I’ve been able to roll out over a short period of time.”
Mediafly has gotten a lot of attention the last couple months, not just for its rapid growth and amazing new headquarters, but also for that fact that you guys raised $10 million. Talk about that experience through the lens of a CFO.
Carson and I always joke, “You’re never not fundraising.” So, no matter what, you’re just never not fundraising. And for us, it was a long learning curve. So, part of the thing that we’ve been focusing on is really building an organization that allows us to get to a point where we can feel comfortable, that we can prove we’re ready to scale. And so, we’ve been working very, very hard to create a replicable sales model, to get the right data and the right information in play that allows us to say, “Okay, we’re ready.” And for the market to be ready for us to take our next step. And so, what we found is the right partner and we were waiting for the right partner to come along. We were waiting for the right amount of money. And you think about dilution and I’m sure you’ve heard of that before. So, ownership and how much money you take, impacts what ownership structure is for the rest of your initial shareholders. And up until the point where we were ready for what we call our Series B round of funding, which is $10 million. We were completely angel funded. And that means you’re going out and you’re talking to people, and you’re regularly out there having conversations.
But up until the point where we were ready, and this really was just this last year, we’ve been having conversations with folks regularly, and only funding as we’ve needed it. And not really funding ahead of or investing ahead of the revenue. So, revenue came in. We’d make the next hires. And we’d internally finance the build. We had a great banking relationship. And I think that really set us up for success and allowed us to really invest ahead of revenue really for the first time and it was because we’re ready, and honestly because we knew what we’d do with it.
And those are the two pieces that we wanted to be very smart so that the investors didn’t take more dilution then was necessary, our existing investors. And then we ended up taking $10 million that allowed us to start investing in very specific areas ahead of revenue. And so that’s increasing the market sales and marketing staff. It’s making some adjustments to the product team to allow us to continue to innovate and add another set of features parallel. And ultimately allowed us to put in place a plan that I think puts us on a track to continue to grow as fast as we have been able to.
So, you just pointed out some critical things I think. From your experience, what else can founders do to improve their odds of raising money when it comes down to it?
I think it’s relationships. And it’s amazing. One of the folks that I talk to and that serves as a mentor for me talked about folks investing in lines and not dots. And what does that mean? That means each time you touch somebody, each time you talk to somebody, it’s a dot, it’s a data point and ultimately what you want to do when you’re talking to investors whether they’re angel investors like we’ve been dealing with for an extended period of time or more recently when we’re talking about potential of raising a series B, you want to be able to demonstrate, here is what we’re trying to do and then deliver and say now here’s what we’re trying to do and then deliver and establish a relationship whether that’s with an angel, whether that’s with an institutional partner. Whether that’s with a potential acquirer down the road or the institutions that are going to fund our IPO. Alright. Whatever that may be, at any given time, that provides us with a set of people that we can go to, that we can talk to, that we can share our story and if it’s a good story, the reality is the cash will be there, the revenue will be there and ultimately whatever the exit may be, that will be there too.
So, we all want Media Fly to be wildly successful and you’re certainly on your way. So, what is an exit or an end game look like for you guys?
Yeah, so it’s interesting. So, I think of that in two ways. So, the first way I think about it is our goal really is to build a great company. And so, we don’t really build that with an exit in mind. The first way is we want to hire amazing people and if we hire amazing people, the revenue will be there, the cash will be there and ultimately whatever ends up happening whether that’s IPO or an exit or an acquisition, that will be there. The other way I think about it is we think of a successful exit as an exit that produces evaluation that allows for 10 time return on early angel investment. So, what does that mean? That means let’s say, if there’s a dollar, a dollar share, easy numbers, a dollar share that there’s a $10 a share ultimate valuation for our investors.
And there’s a couple of different ways to look at that. There’s essentially three ways to provide that return in the long term. If you think about 100% of the successful exits and how we would define that as 10 times early angel capital, 75% of that is a likely acquisition, 15% to private equity recapitalization. So, a private equity firm comes in and essentially provides capital to buy most the organization. And the last 10% or one in 10 chance is an IPO. So, we’re just going to build a great business. We’re going to think about continuing to hire the right people and the right skill sets that allow us to get there and if we hire all perfectly, we get a one in 10 shot to go IPO and other than that, there are opportunities for acquisition or a private equity recapitalization.
Well it’s absolutely an exciting time for Media Fly. So, talk about what’s next for the here and now.
Sure. So, next on the horizon really is we’re excited about some partnerships that we’re creating whether that’s with Sales Force or whether that’s specifically with SAP. We’ve got some neat partnerships that we’re doing and we’re starting to build more of a global alliances structure. So, not only are we having a great marketing team that’s in place. Not only are we conducting great events, we’ve got a product now that we know we can bring to a global market and whether that’s through SAP or whether that’s through our team that’s going to be overseas. We’ve hired somebody in Germany now. So, we are growing our presence and growing our footprint and setting ourselves up for honestly what we feel to be more continued really strong growth.
Alright. Well John Evarts, chief operating officer and chief financial officer of Media Fly. Very grateful for your time today, grateful for your wisdom. I’m sure our audience will appreciate it. Thanks for joining us in the Brand Lab Series today.
Thanks very much Natalie and Brian, I really appreciate this opportunity.
Tags: Technology, Brand and Marketing, Entrepreneurship, Technology
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