Zorik Gordon is living every serial entrepreneur’s dream: launching that one business at the right time and right place that grows beyond what he/she could have ever imagined. “With a little bit of good luck, I stumbled on a large opportunity,” said Gordon, president and CEO of Woodland Hills-based ReachLocal. “You never can predict that sort of thing.” Gordon co-founded ReachLocal in 2004. The firm, which has more than 700 employees worldwide, helps small businesses and large national brands buy and place advertisements on the Internet. The company experienced 3,217.2 percent growth in revenue from $4.4 million in 2005 to $146.8 million in 2008, and recently ranked #39 on the Inc. 500 list of the fastest growing companies in the United States. Inc. also ranked the firm as the second fastest growing company in the Los Angeles-Long Beach-Santa Ana region, and the fifth fastest growing advertising and marketing business in the U.S. Gordon talked about how he “stumbled” on the ReachLocal opportunity; what it’s like to manage the company’s rapid growth; and the next steps. Question: What led you to co-found ReachLocal? Answer: I’m considered a serial entrepreneur, and I’ve had the idea for this company for many years…since the 1990s. I really wanted to go after the local Internet advertising market. There has been a gigantic shift of money going from advertising in traditional news sources and print yellow pages to online. And there was a gap in the market for someone to help companies move to these mediums. Q: What exactly does ReachLocal do? A: We started as a technology company, and expanded to have a large distributed sales force. It was an unexpected twist and led to us opening offices across the globe. The company’s patent-pending technology, according to its website, intelligently selects media, then tracks, optimizes and reports results for local advertising campaigns. It has ties to search engines, site networks, new media and solutions providers. Local Internet Marketing Consultants also provide one-on-one guidance for advertisers. ReachLocal’s core services include: ReachSearch, pay-per-click search engine advertising developed for local and regional businesses; ReachDisplay, online display advertising developed for local and regional businesses; TotalTrack, tools that track the performance of online and offline advertising, including billboards, radio spots, display creative and more; and ReachLocal Xchange, which offers clients advertising opportunities from online search and media publishers. Q: What do you consider to be the future of advertising? A: Very soon every business will both acquire and retain advertising 100 percent digitally, and those mediums are evolving very quickly. Consumers are spending the vast majority of their time in digital media. Our goal is to help customers navigate that change. And there’s a huge paradigm shift with Web 2.0. Facebook and other social networking sites are in their early stages and continuing to expand, and now we’re moving into a world where everybody’s their own publisher. Q: What benefit/value does your technology and business provide to clients? A: Digital is so much easier to manipulate than print advertising. Once clients see what you can do, offline pales in comparison. Online advertising is more accountable, measurable and targetable. Q: What are some of the challenges of growing a company at the rate of 3,217.2 percent over three years? A: You’re not going to grow faster than the amount of quality people you have working for you. One of the biggest challenges is attracting and maintaining talent. And you need to have the right balance of pushing forward while still dotting the ‘i’s and crossing the ‘t’s operationally. From ReachLocal’s first revenue in late 2004, we have actually grown 146,000 percent. The key has been a large market opportunity plus finding the right talent. But the challenge is to keep that momentum moving forward. There are a lot of challenges going from being a start-up company to a 700+ person business. I’ve never run a company as large as this, so there’s a lot of learning on-the-job. But I think it’s more important to evolve the business than to be a perfect manager. You always have to stay two steps ahead. Q: What has it been like growing ReachLocal during the down economy? A: Challenging and scary. The recession has affected everybody. For a lot of people, including myself, we have never seen anything like this. It has been eye opening to see the world fall off a cliff. When you run a business, some downturns are predictable. But this was so unpredictable and humbling. But it helped bring ReachLocal’s management team together to re-focus. You have to realize that you’re not as good as you thought you were. And we’re coming out a stronger business. We did not have to go through lay-offs, but we were neutral in terms of expansion. Q: As a serial entrepreneur, how does the experience of co-founding ReachLocal stack up to the other companies you have been involved with? A: I guess it’s a culmination of the work I’ve done prior, and it has gone further than I ever imagined. As a serial entrepreneur, you often get bored and want to get off the train. But if you do it right, you can still be an entrepreneur in your own business. That balance at ReachLocal keeps me engaged, because you have to push innovation. As times have changed (referring to the recession and rapid pace of technology development) an entrepreneur like me is geared well to work in this world. (Prior to ReachLocal, Gordon founded Jackpot.com, an Idealab business that became Connexus Corp., an online marketing company. He was CEO and vice president of Corporate Development for WorldWinner, Inc., a subsidiary of Liberty Media Corporation and provider of prize-based tournaments in online games of skill. At WorldWinner, he signed major partnerships with Yahoo!, Pogo, Lycos, and Shockwave that positioned the company as the number one provider of cash tournaments on the Internet.) Q: How much venture capital did ReachLocal secure; why did you choose the venture capital route; and has that presented any unique challenges or opportunities to you as an entrepreneur? A: We’ve received $67.9M in four rounds, the latest being $55M in 2007. ReachLocal chose the VC route because it best served the rapid development of our technology and the subsequent roll-out of our national and international sales force. The VC opportunity allows ReachLocal to work with seasoned technology investors who bring a lot of guidance and insight as we grow quickly. Early on ReachLocal received a $750,000 infusion of capital from an angel investor. VantagePoint Venture Partners, Rho Ventures and Galleon Special Opportunities Partners Fund LP have all provided capital to the company. Q: What’s next for ReachLocal; is the company planning on going public? A: We’re getting to a size where going public becomes a possibility. But we’re also dealing with the bad economy. If the economy improves we will consider going public. Right now, we are focusing on growing the business and maximizing dollars. And the shift to online may have accelerated during this period, so we are also investing in the development of new products.
His Reach Keeps Growing
