Tim Hartman on GovExec’s Rapidly Growing Business

Jacob: For everyone who’s listening in a few weeks, it’s weird to talk about it that way, this is a live recording so it will feel a little different than most of the episodes. I will probably be a little bit more conversational than I normally record, but let’s jump in. For those of us who don’t know, and perhaps many don’t, unless you live and work in DC, what is GovExec?

Tim: That’s a great question. GovExec is primarily an intelligence company that has lots of different information services and data serving different aspects of government at all levels. We have a platform that’s focused on the federal government, a platform that’s focused on defense, and a platform that’s focused on the state and local government. In each of those areas, our primary stakeholder are government leaders or national security leaders and we help them with news and information services and intelligence, but then our secondary stakeholders are the industries that support government. Whether it’s a defense contractor or a company that does landscaping for the city of Sacramento, they’re going to be part of our ecosystem.

Jacob: You serve very much like this political crowd. It’s a very different world than, say, what I do, which is marketing or HR or retail. Do you think there’s anything unique about running a media company targeting that government political world versus some of the other B2B media companies represented here?

Tim: Yes, I think it’s very different and we primarily, to clarify, are focused on things that happen in the executive branch more than things that happen in politics. We’re focused on largely career professionals who are doing the business of government. Now at the state and local level, those people will sometimes be elected officials. So there’s politics at the state and local level that we’ll cover but generally, we’re staying out of politics and it’s sort of after the political decisions have been made, people have to implement this and we’re helping them implement policy versus shape policy at the top level. When people talk about this market, I think one interesting fact is that probably about 70% to 80% of our client base are tech companies. They’re Silicon Valley companies that every generation of Silicon Valley comes through GovExec at some point. So whether it was Cisco back in the day or Dell, now all the way up to some of the unicorns like Sumo Logic.

If you’re a unicorn in Silicon Valley, you’re probably going to talk to us. The reason that is that when you’re trying to market to the government space, you’re trying to bring your products to market, it’s very different selling the government than it is any other vertical that you’re in. I often tell people it’s like not taking a product that you’re selling in automotive and bringing it to manufacturing. It’s like taking a product that you’re selling in automotive and saying, we’re going to now sell this in Brazil. It’s a different sales process. It’s a different vernacular, there are all sorts of rules and laws that legislate how you do business with the government.

It’s not a simple vertical to enter and that’s really part of the hypothesis that we had around how the company could grow and evolve when we spun off of Atlantic Media two years ago. It’s a very unique space. Companies come to us often desperate after they’ve been trying solutions on their own, and they say, “We can’t figure this out. We’ve been doing account-based marketing in the automotive sector, and our government leads aren’t working.” That’s a typical entry point for us to have a conversation with a company in Palo Alto.

Jacob: Let’s talk about that spin-off. March 11th, 2020. The NBA shut down the season. COVID is here. World is fundamentally different. Six days later, March 17th, you announced that Growth Catalyst Partners had acquired a significant stake of GovExec. What was that like trying to get that across that final yard to close a big private equity deal where the company was going to be spun off? What were those days leading up to that with a global pandemic ravaging for the country and the world?

Tim: Well, we only have 40 minutes to talk about it, but I could write a book about it because it was just a wild moment. We were going through one of the most consequential moments in the history of the world, and at that moment, I was going through one of the most consequential moments in the history of my life in the company. As we were negotiating, we were down to small deal points. We had been working with Growth Catalyst Partners. There was a lot of trust that we had built over the prior months, which was great because we needed every ounce of trust to get through the transaction in the middle of COVID.

You’re negotiating minor deal points at that point, who’s going to pay for the liability insurance on X thing if it happens in three weeks? It never would happen. At the same time, I’m working with Atlantic Media’s leadership on should we shut down the Office? Clients are canceling left and right across Atlantic Media worried about the pandemic and dealing with whether we are going to be dealing with our own financial crisis as a company as we go through this. The Thursday before we closed, we are scheduled to close on Monday and the Thursday before we closed, we sent everybody home from the office.

We had a few people who were traveling in the company who had to quarantine where they were, quarantine at home. That’s when it really started to hit us that this was more than just a New York event or a news event. This was something that was going to impact everybody’s lives. To send and craft messages that day where you’re trying to reassure everybody that everything’s going to be okay, but knowing that we are going to close a major transaction on Monday that’s going to shake everybody up was a really big challenge. I’d say it was a huge burden as we went through the weekend thinking about when the staff finds out that we are spinning off.

We’re sort of pulling the rug out from under them or taking a security blanket that they had through this crisis and we’re going to have to do a lot of work to reassure them immediately that we are going to be better because of this. That week we had a lot of virtual town halls, a lot of virtual conversations we couldn’t get together. We had planned to have parties and big celebrations and have everybody meet the new private equity partners. All of that had to be canceled and we had to improvise and start doing things remotely. I don’t know if everybody remembers, but Zoom and Webex, they weren’t exactly reliable at that moment because the loads were so high, they weren’t really ready for it either.

We were doing a lot of things that just felt like we were operating without a net. The biggest thing that happened was we went through the weekend. There was a lot of concern about just the underlying financials of the company and what our cash needs were going to be. We did a lot of modeling and generally, the message was this is a time when government at all levels springs into action, which we’ve seen, like when there’s a crisis, regardless of your politics, regardless of what you believe, government steps in to help solve the problem and so it’s going to activate this market. That’s actually what we saw pretty quickly.

We were fine financially and in many ways, it accelerated our growth, which we’ll talk about, but when we got to Monday and we were closing the deal, the stock market crashed that morning, and because of that, many of the partners that helped in the transaction, whether it was other banks that were underwriting pieces of it there’s a lot of insurance that goes into the deal structure. Nobody wanted to get on the closing call. They were all busy handling their own crises in their own companies, maybe their own personal crises, and there was a large part of that day where it felt like the transaction just might not happen because we couldn’t get all of the banks, all of the insurance companies, all the lawyers on the same call at the same time before the stock market or before the banks closed that day.

The big fear I had was, okay, this is just all the partners are willing to go forward with this. The seller, the buyer, me, we’re all ready to roll this out. If it doesn’t happen today, does it happen tomorrow? Do these banks show up? Do the insurance company show up tomorrow? It just was such an unknown period of time and so I think that the final call. We had to close it by 5:00 PM because the banks have to wire money that day. The news was just getting worse and worse in the financial markets and I think we ended up closing around 4:15, 4:20 in the afternoon and that call was not clear that everyone was going to show up.

If nobody showed up, if one party didn’t show up of the twelve parties that had to be there, I’m not sure the deal would have happened. I think we’re really lucky that it did. We’re in a much better place as a company which we’ll talk about because of it. I felt I was living in a movie. It just developed too unreal as an event in my life to have all of this stuff going on.

Jacob: Can we talk about why the deal happened? You were at Atlantic Media before that. We talked about courts a little bit. Courts was at Atlantic Media, why at this point had leadership decided it was time to spin out GovExec?

Tim: That’s a great question. GovExec had been a part of Atlantic Media since, I don’t know, 1996 to 2020, I guess. Atlantic Media was owned by the Bradley family. There’s a man named David Bradley who was the basically sole proprietor of all of Atlantic Media. Probably five years ago, now seven years ago, he had made the decision to step out of media and privately shared it with a number of the executives and said, “I don’t think my family and his children really want to take over the company and run it for another 20 years. What I want us to start thinking about is what’s best for every business and what’s best for the growth of the company.”

He’s a very, just benevolent owner. He’s still on our board. He’s still a minority owner in GovExec. We worked with him over the course of a few years to figure out what does it take for GovExec to stand alone as its own company. Now, GovExec under Atlantic Media was growing really fast. It was still small. We were about at one point, probably around 2015, we were about $10 million in revenue. We grew to about $18 million the year that we spun off. We’re still a relatively small asset and there was a lot of questions around how does a small business like this standalone and how do you make sure that if there is some economic event that the company can survive that.

We built a strategy that was segmenting these markets the way we have, where we wanted to serve three markets, defense, federal, and state and local and we basically built lead generation businesses in each of those markets. As we looked at the businesses underlying lead generation which we’ve heard other people say at this conference is really data. It’s a data business. It’s not a subscription data business, but it’s a lot of data and we were doing a really good job of serving unique data to our client base. The thesis that we had was, if you could combine these businesses with really unique and powerful data that supports the sales cycle, you could turn this into a sales and marketing intelligence company.

We started talking to investors about that. We looked into trying to even just have David own it for a while, but the amount of capital that we needed to acquire these data companies was pretty significant. We ended up coming up with a solution where we would sell 50% of the company, spin it off as a new company and Growth Catalyst partners ended up being the people that we worked with audit, who were just amazing partners for us. I don’t know if there are any other GCP companies in this room but their approach is very much focused on growth, very much focused on partnering with leadership and they bought the vision and had not just an agreement on the vision, but they brought resources to the table that helped us accelerate that.

As part of that, we also worked, I worked really closely with a guy named Peter Goldstone, who’s our chairman now. He was the CEO of Hanley Wood for many years. He has been in lots of B2B circles, and he had done the same strategy at Hanley Wood where they had a lot of titles of print and digital assets in the construction market and they bought data and intelligence companies and paired them together for better intelligence solutions for the construction market. He really had the roadmap and gave me the conviction that you could do this.

We had a number of companies that we modeled our strategy on, but I can’t say enough about working with the right ownership, because there very big difference between growth capital and just regular capital. There’s lots of firms and banks that will give you money to operate a 3% to 5% growth business or a business that’s going to be in decline, but going to make more profits. It’s really hard to find the right investors that say, “I don’t just believe that this is going to be 10% growth business. I think we can make it a 30% growth business. That’s fun and that’s exciting. It can be riveting at times if you’re not growing that fast, but we’ve hit all of our marks and we’re really happy about how it’s played out.

Jacob: Let’s talk about growth. Yesterday I was sitting in the hotel bar preparing this conversation, and I forgot what day you closed your deal, so I google GovExec acquisition. I thought I would find ours but instead, I find it’s a long list of links pointing to every single other company you have bought since you closed your own deal. I have a bunch of questions about this, but since your deal closed, how many companies have you bought?

Tim: I honestly have lost track. I knew you were going to ask this and it’s 12 or 13 and it’s been after the first six months, it’s been about one transaction a month.

Jacob: How are you not like, just exhausted?

Tim: I am exhausted. [laughs] I drank some coffee before I came on stage but it’s been a lot. Our goal in the strategy was to acquire unique data assets and workflow tools that help us build support for the companies trying to go to market. Everything is or is focused on the thesis that it is very difficult to go to market in the government space. A lot of the tools, the dominant tools in our space right now for companies were built over 20 years ago. They’re dated tools with poor user experience, and we knew this from our client base. They would complain as a common complaint in the government space.

There’s lots and lots and lots of free data out there about what government intends to buy and plans to buy. For a lot of different reasons, it’s not good data and the companies that try to make it good have really stopped innovating and stopped building better analysis around it. We had a list of companies that we wanted to approach that were critical to the strategy and we went out and spoke to all of them. Again, we’re still in the middle of the financial crisis around COVID when we’re starting this conversation and frankly, most companies said we’re not interested right now.

We have to get through this year and figure out what we’re doing, but I’ll listen to you, and we gave them this pitch and we gave them the reason for why we were reaching out to them and a lot of the companies were founder-led. A lot of the companies had really great technology and really great product, but they lacked sales and marketing investment and sales and marketing expertise and that was the thing that we could bring that’s through the table was, you’ve grown maybe from $0 to $3 million in revenue. We, with our marketing channels and our marketing expertise, can make you a $10 million data business.

They believe that, and they’ve trusted us to do that. We also kept them in place. They came along for the ride and they’ve still keep their founder title. By having that pitch to them, by the end of that year, people were returning our phone calls and saying, “Hey, I’m really interested in what you’re doing. I want to know what it looks like for me.” We did not plan to buy this many companies and in many ways, it’s still to be known whether it was the right decision or not. I feel really good about it right now, but the reason it’s so many is that so many of these founders came back to us and said, “I want to work with you.”

Every deal that we’ve made has led to other companies reaching out and saying, “I’m really interested in how that worked for them, because I never thought they would sell that company, and they sold it to you so I’m curious as to why.” That’s a great conversation to start having about what the growth of the company is, what our vision for the future is. It’s been a huge success. As we’ve gone through it, I just want to point out that our growth has been partially through acquisition, but 50% of our growth has been organic growth on what you I would call the legacy GovExec platforms.

That’s really been exciting because when you talk about acquisitions and you talk about revenue synergies, you’re saying, “All right, we want to make sure that one plus one equals three, four, or five.” It doesn’t always happen as you know and in the media space, which we’re adjacent to, you see acquisitions happen where one plus one equals like 1.5 or 1.8, ultimately. For me to have the company benefit from these acquisitions in a way that just drives more energy to us and more growth has been really, really awesome. Again, that’s the only way that we can keep that growth going is by having both organic growth and some acquisition growth.

Now when I think we were, I said earlier that we were $18 million when we spun off. This year our revenues will be north of $70 million and half of that is organic. We feel really good about where we are.

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Jacob: Talking a little bit more about acquisitions, it’s one thing to buy a company, something entirely different to integrate that company. You’ve now bought 12 or 13 companies. What has been your integration strategy? How have you developed that over time that makes it so each of these acquisitions is actually additive? Where 1 plus 1 equals 3 and not 1 plus 1 equals 1.5.

Tim: That’s a great question. Again, this was a competency we did not have when we spun off, so first, I would say, working with the right partner on the financial side with GCP. I think they provide a lot more support to us around acquisitions than other private equity firms. That was part of why we were so excited about working with them, and I think that’s just something to keep in mind as you go through this. They helped us with search. They’re great people, so when they would speak to companies about acquisitions with me, there was no daylight between us, which I think is a red flag for founders. If the financial investors are saying something different than the operator, it’s going to be hard to close that deal.

The key thing that we’ve done is we have a rule. I hope everybody that does an acquisition has this rule in place, but it really is, first do no harm. We’re not buying distressed assets that need to be fixed. We’re buying small growth-oriented organizations. We don’t want the transaction to distract the founder or the team from continuing their growth, and so everything we did around integration is aligned around trying to get the painful parts done as quickly as possible so they can return to operating their business. I think of the 13 companies, we’ve only had one leader resign upon transaction, and that’s because she wanted to retire as the CEO and founder of Market Connections.

She had a great deputy in place who’s now the head of all of our research and insights group. Having the founder in place, you have to support them and make sure that they’re not focused on billing integration for six months. We have a dedicated team that is actually aligned with our digital product team, so the leader of our digital products also leads integration for the companies. The goal is within 90 days, we’re going to have all of the back office stuff integrated. We work with an outsourcing company called RSM who helps us project manage and integrate all of the back office, email, finance, HR systems, and we’ve largely gotten that done in each of the transactions, I’d say, definitely within 60 days, and some of them were done within 30 days.

I think is, that’s critical because we’re not talking about email integration across six months or having trouble with people joining virtual meetings because they’re not in our integrated company yet. I think that’s been the key, is having a dedicated team working on these integrations. That team is very tired, I’ll tell you that. They want the acquisitions to stop and I totally understand that. We are slowing down this year. We’ve got enough on our plates and enough growth ahead of us that we don’t need more acquisitions, but I would say that that has been the key, of just having that team being laser-focused on getting it done and getting it done quickly.

I think also just not focusing on integrating the client-facing products. Most of the products are still standalone. We have a long-term plan for that, which we can talk about a little bit about how all of these get woven together, but because we’re not integrating all these data companies into one platform, we don’t have to touch their products at all, which allows us to move on and just focus on sales and marketing.

Jacob: You have this long-term vision, and I want to come and talk about that in a minute, but one of the big things we keep hearing about here is just about user data. Obviously, we’re at an OBTA conference where they have a CDP in user data and all that wonderful stuff. With all these different tools and all these different companies that you’re buying, everyone’s got their data in their own way. With the user data blending it all together, so it’s actually actionable for your team, and then I guess more broadly, what is your first-party data strategy? How are you acquiring this data?

Tim: That’s another question I can talk about all day. This is the secret sauce in everything we’re doing. We believe that the future of government decisions is going to happen in a digital world. You’d be surprised in the government space how many people still disagree with that and they think it’s a relationship-based market, which it used to be. The reason that these Silicon Valley companies are coming in and winning contracts against old integrators like GDIT, Lockheed Martin who used to run all tech for the government is because they’re coming at the market in a different way. They’re using sales and marketing intelligence to drive their growth more than investing in Great BD people. Great BD people are part of it, but they need to be enabled by better intelligence about what the government plans to buy.

The government tells you what they’re going to buy in budget documents, but they often don’t do what’s in the budget document, so it’s pretty complicated actually, to know when they’re actually going to buy the IT system that they say they’re going to buy. We have a lot of data around what government leaders are reading and what their interests are. We’ve been building that into our lead generation products for the probably past 10 years. Building enhanced lead scoring, building enhanced lead follow-up, like lead nurturing programs. The insight that I had maybe five years ago, six years ago now, was the more data we provided around the lead, the stickier our business got. When we spun off, we looked at this analysis of client turnover, which is one of the due diligence, things any company will go through.

If you looked at us, you’d say, “Well, they’re a lead generation company and we would expect there to be 50 to 70% turnover in their client base every year. They’d probably have to replace because this is a transactional lead generation business.” When you actually looked at it, we had, among our top 50 clients in particular, north of 80% client renewal rates. The revenue renewal rates, because we were growing so fast, were even higher than that. We actually looked like a SaaS company already. The insight was, if we can continue to expand the amount of data that we provide, we can increase the stickiness of these client relationships. Ultimately, we’re planning to turn the lead generation transaction with our clients into a subscription product, which many of our clients are already doing with these renewals.

They would like us to work more on a retainer basis with them. If you’ve seen what TechTarget has done in the tech space, we want to do that for government essentially. To enable that, we have to be able to use the data that the companies we’ve acquired create. Whether that’s opportunities data, or intelligence, or research, and use that to enhance the lead generation product.

The second thing we have to do is, those data companies are joining us because of this unique first-party data that helps them enhance what their product is. We have a company called GovTribe, which focuses on federal opportunities, which are RFPs essentially that the government sends out. There’s a big mantra in our space that if you are a company that just receives the RFP and that’s how you found out about the opportunity, then you’ve already lost. That all of the activity happens before the government starts the RFP or releases the RFP. GovTribe helps companies do that. It helps them predict where the RFPs are going to be released and where the activity is.

Our behavioral data was extremely valuable to these two founders because they could then enhance their forecasts of what the government intends to buy with that data. We’re investing a massive amount of money in a tech infrastructure and we have a whole team working on it to help data portability across the organization. When we spun off, our goal was to be 30% of our revenues come from data businesses, which we will achieve that in the next two years probably, but if we can transfer our lead generation business to this membership licensing relationship where people are licensing the leads and licensing the intelligence around the leads from us, then you’ve got a business that’s 60 to 70, 80% subscription data business.

That’s where the real exciting part of this is for me because, again, it’s just a win-win-win. The data companies thrive, we’ve transformed the core business, and our clients benefit because they now have modern tools that didn’t exist five years ago.

Jacob: A two-part question on LeadGen. Right now you offer leads on an ad hoc basis. A client buys a package and they get a certain amount of leads. How do you price that versus this future state where it’s more of a subscription licensing thing where I’m renewing just automatically? How are you thinking about the pricing from where you are right now and where you want to go?

Tim: It’s a great question and it’s something that we need to do a lot of work on and then we’re working on it in the next three months. But the idea is, and we have clients that are piloting this with us already, that as you get more intelligence around the leads, the quantity of leads matters less. I think all lead generation markets have gone through this over the last five years where if you were in the lead generation game five years ago, there were all of these little lead generation agencies and lead generation data companies that were just throwing quantity out.

You could go and you could hire, I’m not going to name names, you could hire this HIP Digital marketing agency and they would give you thousands of leads and they would tell you they’re running them through lead nurturing. It’s all working really well. To some extent it disrupted us. It was really hard for us to compete because they were– it was a race to the bottom on lead pricing. I think lots of marketers were incentivized on the quantity of leads to build, to fuel their CRM systems. It was just such a bad place for everybody to be. It was because people weren’t getting quality leads.

The pipeline wasn’t really moving for companies based on the number of leads. If it was, it was just because you had all the names in and your sales team was doing all the work. As we got into account-based marketing in the last five years and as privacy laws have come to the fore and as just the market was totally saturated, the quality of the lead became much more important. The gap between sales and marketing started to narrow and they needed the intelligence around the lead to do more of the work for them so that maybe you have five salespeople and they all need 10 hot leads a month, but what’s to say that you don’t need 20 salespeople that need that same quantity of leads?

We can tell them that with our solutions. As we go back to clients now, and we pitch this model and we say, we’re going to give you more intelligence around this so you have fewer wasted leads, but we’re not going to charge you on a per lead basis for this. We’re going to charge you on a subscription basis and we’re also going to provide you with lead nurturing surface services around it. It literally is like, where do I sign up for that? That’s great. I don’t really want quantity of leads anymore because it’s all just a bunch of dirt.

Jacob: Let’s move to market services because you have it on your corporate site and you offer a ton of different marketing services. One of the questions I get from so many readers is how they price marketing services, right? Content creation, infographics, custom events. How do you think about charging those and making sure you’re getting the right margins? Because we’ve seen a lot of, on the consumer side, a lot of companies only focus on revenue and do not really understand that there’s a whole like, middle of the P and l that you have to worry about before you get to the bottom. How are you thinking about pricing those marketing services?

Tim: We call them to funnel services now, and essentially if you are doing any sales enablement work right now, the fuel for that sales enablement is content. With that perspective, we are building those on top of the lead services that we provide. If you want a hundred state and local leads focused on cloud computing we can give you a program that just does that, that gives you the leads, but if you actually want to engage them and understand who’s engaging with your content, we want to do that with content and we want to run your program through our own tech stack to make sure that we’re giving you what you want by the end of that.

We don’t really feel like it works well when clients are taking our leads and then putting them through their own marketing automation. That can work to a certain extent, but you need so much content to do that. We win either way because either we’re giving you the leads and then you need content to run them through your system. But if you run it through our system, we can give you much better intelligence around what’s actually happening with those. We charge a lot of times it’s on a flat rate, but we know the hours that go into it. We might say, “Okay, you need 10 pieces of content to reach this goal.”

We’ll do the pieces of content and that’s going to be $15,000 per piece and maybe we’ll give you a discount for the volume of it. The lesson that we’ve learned and it, and I’m going to go back and caveat that government is hard. It’s hard to do content in the government space. You can’t take an asset from the healthcare space and start selling to the government with that same asset because the nomenclature is different, and the language is different. There’s some massaging you have to do for your content. We will help you build that content. We have never allowed that to be a profit drain in marketing services is one of the most profitable parts of our business, actually. It’s going to be more profitable because there are– once you’re in our system, you’re going to pay for those services as well.

Jacob: When you look at the various companies in the portfolio, you almost see a funnel forming, right? You’ve got the content sites up top and then you’ve got these very niche data products. Can you talk about, what you mentioned a couple of years out, hopefully, you’ll get this holy thing integrated. Can you talk about that vision? How does GovExec, the content site say support one of your data platforms? How does that all work? Are you promoting yourself?

Tim: Yes. We have tremendous engagement in the market and I think one thing that is important about our business is now post-acquisitions because we have acquired a few other lead generation and content businesses. We acquire the government division of 1105 media, which was one of our top competitors. Now we have, I don’t want to say we control it, but we have 80% of the audience engagement in our market now. We’ve got all of the top sites in our market owned by us. I think about this in terms of the moat, one of the moats that we have is that we can’t have a competitor go out and acquire this engagement now.

There’s no other things to buy in the market that could allow you to compete with our behavioral data. The behavioral data is all driven by content, news, and insights that the government is reading. One of the biggest investments we’ve actually made is in journalism and we’ve expanded a lot of the sites that we’ve acquired with more news and more information because we want that hour-to-hour engagement. Because that’s what’s going to feed intelligence back. We talked about tagging in the last section. Tagging our content according to a funnel is one of the key things that we’ve done so that you know when people are reading this type of content, they’re likely in the buying decision cycle.

That’s one of the key integration projects is if you’re downloading lots of white papers across our portfolio, you’re probably buying something around what those white papers were about. That’s going to be a key segment that we can offer as lead generations say, these are people who are in the buying cycle. It’s also intelligence that we’re sending back to those data products to say, “Hey, not only is this an opportunity that looks like it’s coming up, but we’ve seen lots of engagement from these parts of this agency looking at this type of solution among your competitive set.” We’re really close to that right now. We can do a lot of that already. The key thing is automating it and building it and transforming the client relationship so that they’re paying for it on our terms versus transactional terms.

Jacob: Let’s take a minute and talk about your event strategy. What events are you offering to partners or to your audience and how has that strategy evolved pre and post-COVID?

Tim: That’s a great question. Pre-COVID events were about 30% of our business half of it was digital like webinars and half of it was live in-person events. Most of our in-person events were actually user conferences like this, where a company like Cloudera for similar reasons, can’t have as many government attendees at their commercial user conference. We would actually white label that and build their government presence for their user conference in a city and we’d do all the marketing and all the work around it. You’d never really know that GovExec was involved in it.

It was branded entirely with their brand, but it was a form of marketing services. That went away with COVID, obviously. This is really the first big event that I’ve been to and our market still has not had many of these user conferences come back. During COVID, we built our own virtual events tech stack. It was the first thing we did almost a week after we spun off and COVID hit, as we knew that we wanted to own the virtual experience in our space. We don’t really enjoy the experience that you get with many of the virtual events companies. It was hard to build true digital brand experiences with their cookie-cutter approach to virtual events.

We built that, it’s called Virtuoso. One reason we did that was because we wanted to please our clients. But the other reason was we know that the virtual events experience over the long term and the virtual events themselves are going to produce a lot of data informing the funnel. At this point, we are a virtual first company. We really are reluctant to go back to live events. It’s not just because of COVID, but because we feel that it’s hard to integrate the live events experience into the data intelligence that we want to build across the entire company. It’s a question mark in our space, will live events come back in the way that they did, and what do we do at that point, but right now we’re through this year and they’re not really coming back. I could talk about this one forever too.

I also think that we are going to do some live events. We want those live events to be truly special events like the Super Bowl of our space. People are still going to go to the Super Bowl, but because of health, and I think because of time, people are going to be reluctant to go to events. I don’t know about everybody here in this room, but taking your time to go to a full-day event at this point, there’s a different calculus that I have because I can be so productive virtually. Why do I need to fly to Houston to meet these people in-person if I can just meet them over Zoom?

People say, “Oh, I don’t know if you can get the same thing done.” I just completed 12 transactions with founders completely over Zoom. You can build trust and you can build relationships over it. We’ll see what the future portends. There is going to be a shakeout for the live events and trade show industry. If you’re not the number one in your industry, you are in deep trouble. I think.

Jacob: Majority owner private equity, at some point they’re going to want an exit. Do you have any idea when that is? Do you have any vision in your mind as to when you decide to sell yourself again?

Tim: Yes. Their plan, like most private equity owners, is in four to five years they want to exit. I’m a big fan of when we were trying to imagine GovExec outside of Atlantic Media, one of the big things that I would tell our staff is that we just want to control our own destiny. You control your own destiny if you’re successful. Companies that are not successful, that are being sold don’t control their own destiny anymore.

That’s painful and that’s what you see in the news about companies that are acquired and integrated. It’s really painful for everybody. That’s one of the things that drives our business decision-making is, what is the 10-year plan for GovExec? Not just what’s the five-year plan. You can flip companies in three years. You can polish them up, but you’re not building a company that’s going to last the different cycles that you have. Everything that I’ve talked about today, I love Jeff Bezos’s rule around this is you can’t predict the future. We don’t even know what’s going to happen next month with COVID and the economy, but we can ask ourselves what will be true in five years?

Will this be true that marketers in this space and salespeople in this space want more leads and they want more intelligence around them? Will it be true that government will still be making massive acquisition decisions around big budgets? We can build every pillar of our strategy around what is true in 5 to 10 years. That allows us to control our own destiny. The reality is we’re going to outgrow GCP.

They are a company that helps small companies become mid-size companies. Our next partner needs to be a company that is helping companies grow from a mid-size company to a large company. At that point, we might be a $120 million company. We need an investor that’s going to help us get from $100 to $300 million at that point.

Jacob: I want to end the show with the same two questions that I ask every operator. First, what is a mistake that you have made in your career that you wish you hadn’t and what did you learn from it?

Tim: I should have been prepared for this question. I didn’t even think about this. You do ask this a lot. I think that one of the big mistakes that I made is, and this has written about in the news, so it comes up from time to time, but Atlantic Media owned and David Bradley still owns a company called National Journal, which is a politics and policy-focused B2B business.

It’s run by a great guy named Kevin Turpin, who you should interview sometime because he’s fantastic. We made a mistake where we really believed that the future of that market was going to be vertical ad-supported media. I was running that and GovExec at the same time. We started building the strategy and we started staffing because we really were convicted about the strategy.

After about six months, we realized that the strategy wasn’t going to work and there were a lot of reasons why. One of the key reasons was a market reason which is that it was at a moment when programmatic advertising was taking over and there was just a lot of competition in vertical space, but there was also a cultural reason that we couldn’t. That’s that National Journal over the past five years, prior, five years before getting there, had pivoted their strategy three or four times.

When we went out to meet with clients and pitched this new vision, they were sort of laughing at us and saying, “Why would I believe this now? Every time, every year you guys come out and give us a different strategy for what you’re going to be when you grow up.” When we didn’t have the client support for it and you looked at the long-term market viability of it, we realized that the company really needed to be a data and membership company.

What we had to do then was unwind the media business and it was really, really painful and really, really public. People write about political media all the time in The New York Times and your competitive set of politico. It was a very public transformation that we had to do and it was very painful. I think that if we could do it over again, we would start with the five-year question of we know that there’s going to be workflow tools that are used in lobbying and policymaking for the foreseeable future. How do we become one of the best companies in the world at that and not have gone down the ad-supported model?

Jacob: My second question is, what is some advice you would give media operators, everyone in the room who was looking to grow their business in 2022 and beyond?

Tim: Well, I think that I get asked this a lot from different companies. They say, “Well, can you come and speak to us about growth?” Because Atlantic Media was known for growth. It launched Quartz. Atlantic reinvented itself. We launched huge digital brands at GovExec. The question I always have is, well, how much do you actually believe in growth?

Most of the companies I speak to are trying to get to three to 5% growth per year. I’m coming in and I’m talking about tactics that are going to help you grow 20 to 50% per year. It’s a totally different culture and a totally different set of activities. If you’re trying to grow at 20 to 50% then you are three to 5%. 3% to 5% growth, you can get through better client acquisition, incremental product improvements, better marketing, and that’s fine.

There are lots of companies that want that and can benefit from that because they have a different strategy. If you’re really a company that’s trying to grow by 20 to 50%, are you willing to take a loss for two years while you build that revenue growth? Are you willing to upend the talent structure that you have at your company so that you can enable the really talented people who are going to drive those product development for the foreseeable future and to support them?

I feel like my recommendation to people in this room particularly, there’s a lot of talent, there’s a lot of digital talent in this room. When you’re looking at companies and you’re looking at destinations, ask yourself, “Not only are they paying me a lot or they are giving me a leadership role,” but are they going to support you with the resources you need to get the job done?

Because that’s where people cycle out of jobs really quickly. You go there, you’re the new head of digital for– you’re a perfect example. Morning Brew has definitely committed to growth. It’s a growth-oriented culture. Everything they communicate about is about growth. Industry Dive with Sean Griffe is a growth-oriented company. If Jacob went to company X that wasn’t growth-oriented, he would’ve gotten there and they wouldn’t have provided the resources, the culture, the policies, the flexibility to invest in growth around him and he wouldn’t have stayed.

That’s the key advice I give people is really do your diligence around the environment that you’re getting into and ask yourself, do you want to be in a growth environment or are you comfortable in a company that’s not a growth company? Just be honest about it. There are lots of good roles at companies that are only growing 3% to 5%. That’s fine too, but there’re two different paths particularly in the B2B media, SaaS, workflow companies right now. There’s a difference of cultures.