At Splash: ReachLocal hiring to evolve local

CEO and co-founder Zorik Gordon delivers lessons learned at Vator Splash LA

"Seven years ago," Zorik Gordon began, "we were just like all of you guys." Now, Gordon's ReachLocal is a business with 1,500 employees around the world and $400 million in revenue.

Here's a summary of his lessons learned as head of a business that grew from a teeny startup to a post-IPO company on track to take over the business of helping local merchants reach users online.

1. Pick your team carefully.

“We complete each other,” said Gordon of his team. It's sappy but it's the key. As a startup, the original team members are responsible for making thousands of correct decisions and it’s going to be an iterative process as time goes on. Pick your team carefully because they are the ones that will make and/or break you: co-founders first because earliest decisions are the most important, then core employees. Don't forget the venture capitalists: “if your VCs aren't hurting you, they’re helping you.”

2. Don’t be greedy

Echoing advice from many an entrepreneur, Gordon revealed that ReachLocal "took the money when they gave it to us." In general, the seasoned CEO seemed to discourage worrying about funding. Maybe that's because ReachLocal got lucky: an early angel gave the company an initial $75,000, followed by periodic chunks of $50,000, even though he didn’t know what they were doing. When ReachLocal finally turned to institutional funding, the company raised $7 million--more than they ever thought they would need.

3. Pick a huge disruption

ReachLocal raised money with Benchmark Capital after the tech bubble burst, when no one was raising funds. And it had a lot to do with disruption. If your space isn’t big enough--local is something like a trillion dollar opportunity--then you're not giving yourself the right opportunity. Facebook wasn’t built to become the social network, but you dig to find that white space. Gordon says the reason his entrepreneurial team is still present at the 1,500-employee company is because local is that big and that disruptive.

4. Pick the problems that need solving

When the Web began, everyone tried to replicate offline services to help users. By the time ReachLocal rolled around, Gordon realized that users already had Google and other services. SMBs and merchants, on the other hand, still had to spend a ton of money and time to get online. It's all about clarity, perspective. "If you have perspective and a clear path, that's really the key to becoming a successful entrepreneur,” Gordon said.

5. Focus

Be "laser-focused" on the one thing that really matters, one at a time. At ReachLocal, the first thing was about *how* to get SMBs online. After that, it became about distributing that technique to millions of SMBs. "There are a lot of things to do," Gordon admitted, "but at any one time, there’s one thing you should be trying to do."

6. Evolve

"Unless you’re Steve Jobs and can make something iPhone perfect," Gordon can "guarantee you didn’t get it right, right off the bat. Embrace the pivot." ReachLocal was supposed to be a self-service platform that had a volunteer army of people putting in campaigns for business. "We were way off," he said. Eventually, Gordon and his team evolved the business to go where they needed.

7. Momentum

When things don't work, it's not too big a deal. When things do work, though, they work by "orders of magnitude." When the Reachlocal volunteer army didn’t work, Gordon says they threw it away. They started to partner with agencies, like yellow page companies, and noticed a couple guys "performing off the charts," as in 200-300 percent better than everyone else. Gordon brought them in, duplicated their method and results and set out building a business on that model. (Side note: Gordon insists that “everyone in this room has to be data driven.”)

8. Grow

The first instinct for every VC, when faced with a growing and succeeding business, is to bring in a seasoned manager to replace all the younger, less experienced people. It shouldn't be that way anymore, because the world is moving much faster and businesses are being forced to become more entrepreneurial. It's all about finding the same level of quality people and growing the business. Everyone has the capability to do it.

9. Keep evolving

"White space ain’t gonna be white space for too long” these days, said Gordon. For example, local has changed dramatically in just a couple years from the hands of Google and Yelp to Groupon and LivingSocial. "It's not a fad by any stretch of the imagination. The next phase of the local is going to be much more like Amazon than Google.” In fact, Gordon is so serious about making the transaction better that he told entrepreneurs in the Vator Splash audience to email him at zorik@reachlocal.com. They're hiring.

10. The entrepreneur

Fundamentally, you’re going to be managing your business for much longer than you expected. So you better feel comfortable being an entrepreneur.

To hear more about ReachLocal, Zorik Gordon and his perspective on the burgeoning local advertising space, check out our interview from last week.