View from the Corner Office
Ken Brock, Founder/President - Names & Numbers
01/21/2010 - In View articles, we only talk with the most senior leaders in the industry. In this article we present one of the industry's extra special leaders, a true Horatio Alger story.
Ken Brock is the Founder, President and CEO of Names & Numbers, a leading independent print, online, and mobile Yellow Pages publisher that is now celebrating its 36th year in business. The business was literally started from Brock's living room when he used savings to purchase a small publisher based in Springfield, MO. He and his wife Debbie have now developed their directory empire to over $50 million in revenue with 60+ directories spanning 11 states.
Brock certainly knows the business inside and out - in the early days he alone organized all aspects of the five directories they published, including sales, production, and distribution. The privately held company now employs over 250 people. The business is not a static operation either -- in December 2005, the company established new phone books throughout the state of Texas, demonstrating the company's desire to continue its successful expansion. The company's growth closely paralleled the landmark judicial decision to break up the original AT&T monopoly into the seven regional Baby Bells. The breakup opened markets and allowed the business to customize for individual areas. Names & Numbers strategy then focused on smaller communities rather than just produce one large directory that covered an entire telephone company area.
With this rich history one could assume that Brock and the company are steeply fixed in the past. During an interview with Brock that coincided with his 36th anniversary celebration, we found a leader who still has a deep passion for the business, but also the vision to see where the company needs to evolve next. You will find his comments show that while he believes the print products still have a lot of runway left, the company is being smartly positioned to capitalize on any of the digital platforms that local businesses will want to advertise in going forward. Brock's vision of providing a more accurate, complete, and easy-to-use print phone book in the areas it serves is being actively ported into its other products.
Enjoy this opportunity to meet one of the most successful entrepreneurs this industry has ever seen.
YPT: Did your family influence why you went to work in the Yellow Pages industry??
Yes, my father owned a publishing company that I worked for as a premise sales rep and we published telephone books for independent telephone companies in the 1950's and 60's. There were a lot of independent telephone companies at that time. We competed with a number of other publishers for the contracts with these Telco's.
That background is kind of interesting considering the business we are in today. These were very small utility books, but nonetheless we worked with the "telephone company". Out of that experience I learned a lot about publishing phone books from the utility mindset. That experience was helpful as we transitioned this company into the independent sector we are now in. We brought with us the key habits and company philosophies that make our products a little more thorough, more accurate, and user friendly than a typical Telco book.
YPT: What was the catalyst that really allowed Names & Numbers to grow?
Probably when the old AT&T Telephone Company broke up into the Baby Bells. As the AT&T empire was broken up, advertisers hadn't yet adopted the idea that a truly viable telephone book from someone other than the telephone company could be done. The breakup highlighted the importance of equal access to the business subscriber base. At that time there were some early independent publisher renegades putting out big scope "area wide books" as we called them. But most of us didn't think that format was viable going forward.
Around the mid 80's timeframe there was a real transition of period across the entire country as more users and advertisers were becoming aware that independent books were a viable product for them. Most were just realizing that these new independent books began being published by someone other than the telephone company had high usage, better features, and were more community oriented that the Telco books. It was certainly a new mindset for all of us, that independent directory publishing could be a very viable industry and we aggressively got involved.
YPT: Who were your biggest mentors/supports??
One person I have introduced a number of times as my mentor is Roy French. I had gotten acquainted with him while he was still in Kansas City. He then went to California to start Transwestern Publishing. Roy was a forward thinker and was ahead of the curve on many of the new ideas that were emerging at that time on product design, sales techniques, and sales management. As I developed a relationship with him, I watched him launch several new products that would later result in Transwestern becoming one of the most successful, largest independent publishers in the world. I would say I learned the most from him as compared to any other one person in the industry.
YPT: Is there still such a thing as a career path within yellow pages?
Most definitely yes. There's still a lot of opportunity left in the Yellow Page industry particularly on the independent sector of that industry. If I were 20 something years old today, I would want to get into this industry and make a career in it. Most the current options are in sales - can you think of another position where you will be in front of the senior level people, business owners, decision makers of 5 or 6 different companies each and every day? At Names & Numbers we also invest very heavily in sales training. We start with 2 weeks of classroom training and then after new reps have been in the field for a few weeks we bring them back for another week on sales techniques. At that point, they will have experienced real world situations and buyers objections. That last week of training helps them work with those concerns. Where else can you get that kind of background which you can use wherever your work career takes you? And did I mention our reps also make a nice living at this too?
YPT: There is perception among many consumers and even advertisers that the print Yellow Pages are a "dead" product. What do you think??
I've heard and seen the comments from some people who are forecasting that the print Yellow Pages products are dead or nearly dead. I think that prediction is very premature. The print Yellow Pages are far from being dead. I even believe that these products have the opportunity to experience something of a rebirth over the next few years. Why? Because through our research and call tracking studies, we know that Yellow Pages are still being used for buying local services and products at a very high rate. As we do our RCF (Remote Call Forwarding) call tracking studies it appears that for our print products over 90% of people still use print Yellow Pages at some point in their buying process. It is clear that the print product is still the medium of choice when making a local buying decision. And those results include tech savvy younger people.
The advantage we have now compared to say ten years ago is a terrific cost efficient, mechanized system of testing which verifies the effectiveness of the advertising buy in print Yellow Pages. I think that is not just good, but it actually is great, bordering on revolutionary, because once an advertiser gets the tracking results, they discover "…my goodness, why did nobody ever tell me about this?" They can directly see what a terrific medium it is for marketing their business. We can now demonstrate it in a tangible way a true ROI for the advertiser. It is a huge advantage that we have in our industry that newspapers, billboard, radio, television haven't taken advantage of and don't have the same quantifying mechanisms that we have available to us. With this information we can present a compelling value story to our customers.
YPT: Doesn't the growing popularity of the online/digital products change that compelling story??
Not at all. If anything these new platforms enhance it. As digital products become more popular, as digital usage grows, we can add them to our advertisers programs. Hence, the old fundamental value story is still intact. We just cover multiple platforms - print, online, and even mobile with that value story. The information we provide is still available 24 hours a day, 7 days a week, 365 days a year. It's just matter of which medium you are accessing it from. Our core value principles haven't changed and we'll be able to remain more than viable as an industry and as a business for that reason alone for quite some time to come. New delivery mediums just broaden that value story that we can tell to an advertiser who may not have ever heard it before. It is a wonderful opportunity to tell a story that now feels fresh, new, quantifiable and even deliverable and at a time when advertisers don't have an abundance of advertising dollars, when people are working hard to find ways to cut back. No smart business would cut back on things they know absolutely work, absolutely give them a good ROI, and can eliminate all of the parts of their budget where they are uncertain of its effectiveness. It is a lesson I think much of the industry could embrace.
YPT: What major achievements has the company had in the past last year?
I am most proud of the fact that we have remained strong and we have remained stable in a bad economy. Through all this we have also started the process of relearning an old lesson. We used to be really good at selling to new advertisers, because we had to when we first started. That was just our only option for growing the business -- to go sell to people that were not currently revenue customers. With many of our customers currently having financial difficulty, cutting back, or cutting out, or some not even surviving, we've had to relearn the old lesson on how to go beat the bushes and get back to fundamental sales work that was the backbone and foundation of our company. I think that is the most revolutionary thing that has happened in the last year for us -- relearning those old lessons.
YPT: Are there areas in the company that you are more disappointed with; things you would like to see faster, quicker, better?
Our internal support organizations are a smooth running, well tuned operation that works well together. I am pleased that they are operating near perfection on most everything we do internally, operating on schedule and with a high degree of accuracy. The area that we are working most on building and developing is the sales team and our sales approach. Our sales team for many years has been too concentrated on just renewing customers. Those efforts have allowed us to sustain and even achieve quotas in many cases with very little emphasis on new customers. That's a mistake of course; we universally recognize that today. I would say learning, once again, how to do a much better job, much more aggressive job of getting new customers into our products is the most significant thing we have going on right now.
YPT: In many of your markets you have 2, 3, even 4 competitors. Is all that competition a good thing for the industry?
It actually is. Contrary to what may seem to be too many phone books, while we do hear that complaint from customers, their perception is that it is costing them a lot of extra money to be in so many different books. In some cases, that is a true perception. However what we're seeing happen which is a little surprising, is that in most of our markets there is room for multiple phone books with no one publisher having a monopoly on sales. It's a recent revelation to find out that that's the case and that our products have done so well, surviving side by side in the same markets with bigger Telco players. A healthy environment of competition is good for all the stakeholders, and their customers.
YPT: But several of the major players have been going through severe financial problems, even bankruptcies?
There is obviously a number of major players that are going through financial woes, mostly because they used cheap debt to grow and never expected a double digit negative year would come and impact them so badly. It isn't inconsistent with many industries outside of our own. We are all seeing numerous examples of businesses that have maybe risen a little too fast, too rapidly, and forgot to put in the quality and the safeguards that they should have.
In a meeting with our banking group recently, I warned them that they would be hearing news reports of the companies in our industry that are doing badly. I also made sure they knew that they probably wouldn't be hearing news reports about those companies still doing well. That doesn't make the news. And there are a number of good companies in our industry that are doing just fine and will do well as going forward.
Even the companies that are making the negative headlines today can probably take this as an opportunity to restructure and regroup. I don't think they should be bailed out. I don't think any company ought to be bailed out. But they should take the opportunity to resize, to do wants needed to become healthy again, to put their roots down a little deeper, put out a higher quality product, and do a better job of telling advertisers about their value story. I believe that companies that truly are serious about doing that are likely to go forward in a positive way and become profitable again, although they may be smaller than before.
YPT: Where do you foresee Names & Numbers being in five years, ten years?
We maintain a five year business plan and have for a number of years occasionally flirt with the idea of a ten year business plan. Our current forecast is positive about the opportunity to grow and have a prosperous future here at Names & Numbers.
First, and the potentially most lucrative growth strategy we have, is to place greater emphasis on market penetration in the areas we currently operate. Simply put -- sell more ads to the people that we just have not taken the time to sell ads to before. The reason that a business may not be in our book currently is because we probably have not gone to talk with them.
Second, many of these small and midsized businesses are now owned and run by younger people, people that have never been presented with the true Yellow Pages value story. So we've gone back to the basics of bringing that message to our new customers and introducing them to the old fashioned value story that yellow pages still deserves to have told.
Beyond that we will obviously consider acquisitions. I'm certain that there's going to be several opportunities to acquire some smaller publishers, especially those that are contiguous to our markets. I think those publishers will find Names & Numbers to be a very good partner to sell their company to.
The final way we'll continue to grow is just through old fashioned Greenfield-ing, starting new books in the areas that we believe new books will complement an existing district.
YPT: Simba just sent out a note that said 11.1% of the industry revenue is going to come from non-print products. How do you see that number growing, is it going to be 50% here in two years, three years?
I wish I had a clearly focused crystal ball that could forecast that accurately but I don't. What I am confident about is that digital products are going to play an important role in complementing all of our print products. We are currently selling quite a bit of advertising into our digital products. Both our online (www.namesandnumbers.com) and mobile products (namesandnumbers.mobi) are seeing increasing usage and advertiser interest. We expect in 2010 we will continue to expand that product lineup. We all expect as we go forward, these products will become a bigger percentage of our sales.
But I also have to say we're kind of glad to hear so many of our competitors paying so much attention right now to their digital products because it distracts them from competing with us on their print products. I believe the wholesale migration to these digital offerings, abandoning the print products is very premature. We're happy to continue our major focus on our print products and develop the new opportunities that can offer true value to the advertisers and not just throw a new product into the marketplace because it's the new, hot thing. Down the road, we'll certainly have more emphasis on the digital products, but we don't see it as digital vs. print. It should be viewed as a package. The overall package itself will have a changing ratio of where money is invested. At the end of the day the mission is still about creating leads for customers, independent of whether their customers are looking in a print product, online, or using mobile. Our job is still to bring business through the front door of our advertisers, whatever path consumers may choose to do that through. It was our strength when I started this company, and that continues to be true today.