Octane: Ralph Folz - CEO, WordStream
Tuesday Jan 25, 2011 by Keith Cline - Founder, VentureFizz
We are excited to have Ralph Folz as our guest this week on Octane! Ralph was the founder of Molecular, a venture backed internet consulting firm that he launched in the mid-90's. Molecular was acquired by Isobar in 2005.
Ralph is currently the CEO of WordStream in Boston, which is funded by Sigma Partners and Egan-Managed Capital. He also plays a major role in the startup community as a board member or advisor for a variety of companies such as Backupify and LocaModa.
VentureFizz: Can you provide an overview as to your background and professional history?
Ralph Folz: I came to Boston directly after college to work for GTE Government Systems (now part of General Dynamics). While working at GTE, I went to Boston University at night and received a Masters degree in Software Engineering. While I don’t get to code anymore (I loved coding!), the engineering core of me still remains. I love data, analytics, metrics, process, and building companies that are solid and can rapidly scale.
After GTE, I received my first taste of entrepreneurship by joining a 10 person company in the Scientific Visualization and Finite Element Analysis space (“SciViz”). I wasn’t a founder, but I learned a TON about risk taking, building software, and many lessons learned that I carry with myself to this day.
In 1994, I started Molecular with one co-founder (Dr. Thomas Little of Boston University). Our initial vision was to create a software platform on top of TCP/IP to distribute classroom information (audio/video/slides) over the Internet to break the geographic bounds on learning. At about the same time, the web came along and provided a standards based way to accomplish many of the same ideas. We morphed our original concept and became one of the first web development firms in the entire country. We were young, a little naive, but incredibly passionate about how the web was going to change the world.
Fast forwarding ahead, we built Molecular over the following decade into a great firm. We raised $20M from CMGI in the year 2000. We made it through the tough years, and in 2005, we sold Molecular to Isobar (part of Aegis Media – London based, public media holding company). I ended up staying with the parent company for a few years becoming the Global Chief Operating Officer for all of their digital marketing holdings around the world (3,500 people and 40 countries at the time).
Today, I’m back doing something entrepreneurial again. I’m the CEO of WordStream. A Sigma Partners and Egan Capital backed company with SaaS offerings in the search marketing space.
VF: Molecular was a very successful firm with a great reputation with clients. What were the core values within in the firm that led to its success? How did you keep these core values in place as the firm grew?
RF: We had a strong set of core values in Molecular. The two values that meant the most to me were Transparency and Authenticity. We had a strong culture of sharing information openly, and “Authentic” to us meant no room for egos in our firm. Be direct, be yourself, internally, and with clients.
We truly lived our values. We incorporated them into job interview questions, our awards program at company meetings, our employee performance reviews and lastly, the walls of our company were covered with stories about employees who demonstrated our values.
VF: You led Molecular through a very difficult economic period (dot-com bust & post 9/11). What did you do to keep the business going?
RF: When the dot-com bust hit, the vast majority of our customer base was large enterprise customers, while many of our competitors had predominantly dot-com businesses as their customers. Our enterprise customers cut back, but they didn’t go away. Life was painful, but we still had a strong stable of customers.
While this seems like a brilliant strategic move after the fact, we ended up in this place due to a different reason. A few years prior to the bust, we did make a decision to stop working with dot-com customers. However, the reason wasn’t because we thought they would implode. It was because we didn’t work well with them. The ink wouldn’t be dry on a specification and they wanted to do something else. It didn’t mesh well with our engineering background.
VF: Molecular was acquired by Isobar. What advice would you give to entrepreneurs about the acquisition process?
RF: I’ve now been on both sides of the acquisition process. Here are a few words of advice:
- Ideally, look for an acquirer that has similar values to yourself and your firm. This will go a long way toward a successful integration.
- It always takes longer than you think. Always. An acquisition never goes quicker than expected.
- There are many things that can screw up a deal, some of which are not in your control. Keep running your company like it will be around forever. Don’t cut corners because an acquisition is pending.
- Acquisitions are extremely distracting. An investment banker once told me that most companies in the process of getting acquired end up missing their numbers during the process (this doesn’t put you in a good negotiating position!). Limit the team members involved with the acquisition to reduce distraction.
VF: What prompted you to join WordStream last August?
RF: There were quite a few reasons I was excited to join WordStream. First, I had been on the Board of Directors for a year, so I was able to get to know the Founder, Larry Kim, a few of the key executives and the investors. Secondly, I love the search marketing space, and more broadly the performance marketing space. Search marketing is a rapidly growing industry and there is a great opportunity for companies to emerge with tools and platforms to help marketers make the most out of the channel.
VF: What does WordStream do?
RF: WordStream is an on demand search marketing software platform. For a very reasonable cost (starting at $300/mo), we help small and medium sized companies and agencies on behalf of those companies leverage search marketing for customer acquisition.
We integrate with your Google AdWords account, connect to your campaigns, and then provide various tools that help you structure your campaigns and AdGroups to maximize your results. Powering our platform is our exclusive trillion keyword database – and we pair that with our customer’s search query data and competitive insight to provide differentiated search recommendations and strategies.
Our goal for our software is to apply the equivalent of man-years of expertise to your paid search campaigns in an automated way each and every day.
VF: Who are your target customers?
RF: WordStream is a great fit for any company spending a few thousand dollars a month on Google paid search to drive customers to their service or product. Our platform is simple enough for a beginner search marketer to leverage but it really shines for those that understand search marketing techniques. While our target is small and medium businesses, and agencies, our software platform can scale up to customers spending hundreds of thousands of dollars a month.
VF: You sit on the Board of Directors / Advisors for a variety of startups like Backupify, LocaModa, etc. What advice would you give first time entrepreneurs who are launching a company?
RF:
- Boston is a fantastic place to start a business. Being successful requires an ecosystem including strong educational institutions, available capital, and a culture that embraces risk-taking. Not all parts of the world have this. We have it here. Be thankful and take advantage of it.
- Build a great team. A great team that can execute will have a disproportionate impact on your path to success. When you have someone on the team that isn’t working out, don’t avoid it. Deal with it.
- Join a CEO group. Early in my career, it helped me to meet with other CEOs (and mentors) who could help me tackle things I was encountering for the first time.
VF: In your opinion, what is the role of the CEO in a startup?
RF: A startup requires a CEO to wear many hats. Let me touch on the top three things I am doing right now, but keep in mind, these change based on stage of a company’s evolution:
- Build the team. With a start-up one of the most strategic assets you have is your leadership team. With each addition I consider experience, work ethic, values to insure I am building the right foundation for growth. This means I am spend a ton of time strategizing on our future organization, interviewing, writing job descriptions, and doing reference checks. My short term goal is to get an exceptional team in place here at WordStream. We are making great progress.
- Set Strategy. I’m working with each of my key executives to define goals for the year. We have a goals document for every department. They are specific. They have annual goals, and 90 day goals. Each goal has specific measures for success. Everyone knows what they can do to contribute to our success.
- Instill a customer focus. We are redesigning the insides of our company such that we are always listening to customers. Not just happy customers. Customers who cancel because our software didn’t meet their needs. We’ve incorporated personas into our strategic planning and day to day operations. This helps us stay aligned on our target customers and work in lockstep across the organization to acquire and service them effectively. Listen, listen and listen some more.
VF: Personal question – outside of work, what do you like to do?
RF: Nothing beats getting up before sunrise, walking half a mile down a beach on Cape Cod and spending a few hours fishing from shore. Great way to relieve some stress and think strategic thoughts!
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