Thirteen months after becoming CEO of Hootsuite Inc., Tom Keiser still hasn’t set foot in its head office in the hip Vancouver neighborhood of Mount Pleasant. In fact, he has never even been to Vancouver, though he hopes to meet his leadership team in person next month, pandemic restrictions permitting.
“It’s been quite bizarre,” to run the 1,000-person company from his San Francisco home during COVID-19, Mr. Keiser said during a frank, wide-ranging interview with The Globe and Mail.
That hasn’t stopped the 55-year-old veteran executive from making a big impact on a company that helped put Vancouver – and Canada – on the global technology map a decade ago. Hootsuite was a pioneer in the business of providing digital tools to manage companies’ online posts and monitor public forums, becoming one of Canada’s largest private software companies. By last year, however, it had lost momentum and strategic focus.
Hootsuite was hampered by leadership issues, a slew of senior departures and sluggish growth before founder Ryan Holmes gave up the CEO role (he’s still chairman). The company stopped a sale process in late 2018 after potential bidders valued Hootsuite at less than US$750-million, below expectations. Rivals Sprinklr Inc. and Sprout Social Inc. have since gone public, sporting valuations in excess of US$4.5-billion. Meanwhile, several Vancouver startups have hit “unicorn” valuations of US$1-billion long after Hootsuite was expected to do so.
Under Mr. Keiser, however, Hootsuite is regaining its mojo. He has pulled back on the company’s efforts to woo large corporations to focus instead on mid-market and small and medium-sized enterprises, where it is strongest. “We’ve definitely churned some large accounts we probably weren’t a good match for,” Mr. Keiser said.
He’s aiming to attain results more like leading subscription software vendors by trimming expenses and improving the company’s efforts to convert new or trial customers to longstanding paying clients.
He’s tightened processes to ensure Hootsuite expands sales efforts to existing customers after landing accounts. “These seem like really simple things, but it takes discipline and a methodology approach of training and support to put those in place,” he said.
Mr. Keiser has brought in star recruits, including former LinkedIn sales lead Melissa Murray Bailey as senior vice-president of global sales; veteran chief marketing officer Maggie Lower; and Manish Kamra, senior vice-president of software development, formerly an executive with BlackBerry, Ericsson and Intel.
Hootsuite is also expanding through acquisitions. On Tuesday, the company is announcing its second deal this year, paying $60-million for Montreal-based Heyday Technologies Inc., a fast-growing, artificial intelligence-powered, chatbot startup. With Heyday, Hootsuite can offer corporate clients a way to sell their wares through instant messaging, giving it a stake in the blooming cross-section of commerce and social media.
So far, the results are promising. Hootsuite, which posted single-digit growth in the pandemic-addled 2020, booked 20-per-cent revenue growth in the second quarter, six months ahead of target for achieving that pace. On company review website Glassdoor, Mr. Keiser has a 94-per-cent rating from employees – 40 percentage points higher than Mr. Holmes when he agreed to step down in November, 2019.
“When you bring in new leaders to startups like this, you try the best you can to find people with credible backgrounds and you’re kind of rolling the dice any time you do it,” said Damien Steel, global managing partner of OMERS Ventures, whose investment in Hootsuite gives him the right to observe board meetings. Mr. Keiser “has honestly done everything we’d hoped and more.”
Hootsuite was born in 2008 as a spinout from Invoke Media, Mr. Holmes’s internet service and marketing consultancy. Hootsuite developed tools to enable companies, government agencies and non-profit agencies to get a handle on navigating the shift in public communications and manage their online activity across new social-media channels, including Facebook and Twitter.
Hootsuite and others provided a solution to a new problem. By late 2011, Hootsuite was generating $1-million in monthly revenue and drew financing from U.S. and Canadian venture capitalists. The company grew rapidly and built a cult of personality around Mr. Holmes as a digital economy thought leader.
But as Hootsuite reached US$200-million in annual revenue and operating profitability, it stagnated. It missed quarterly sales targets and “the product didn’t evolve effectively enough to meet the demands of customers as they evolved,” Mr. Steel said. Industry dynamics shifted as Twitter began to extract payments from Hootsuite and its peers.
Months of tense board discussions ensued in 2019 over whether Mr. Holmes was still the right person to lead the company after prospective buyers raised concerns about performance metrics and high customer and employee churn. The company laid off 10 per cent of staff in April, 2019, and overhauled its leadership team after Mr. Holmes agreed to step down.
Mr. Keiser, who previously held senior operating and technology roles with customer service software maker Zendesk Inc. and retailers Gap Inc. and L Brands Inc., agreed to take the job after ensuring “that we had real clarity around roles. Ryan was very much ready to … fully step away from the business.”
Mr. Steel agrees. “Lot of times the founder stepping aside can really get in the way and without realizing it, work to sabotage the new leadership. Ryan to his credit has not done that.”
So far, Mr. Holmes, still a major shareholder, has remained “very hands off,” allowing his successor to “make decisions clearly and quickly,” Mr. Keiser says. “The organization has responded well to that. I think there’s a hunger for longer range plans and strategies; Ryan was pretty good at doing that, which I hear from employees. But I’ve not heard from employees that they’re looking for more insights and inputs from him.”
“I am grateful that the relationship Tom and I have cultivated is so positive and I think the whole organization can feel our alignment,” Mr. Holmes said in an e-mailed statement to The Globe. “Selecting a CEO was one of the most critical decisions I’ve ever made in business – and I’m thankful for my appointment of Tom every day.”
Mr. Keiser was beset by his own controversy when a disgruntled employee went public last September revealing numerous employees had objected to a Hootsuite contract with U.S. Immigration and Customers Enforcement over the agency’s alleged aggressive anti-immigration measures. “We learned a lot” from the fracas, which prompted the company to cancel the contract at great cost, Mr. Keiser said. “Our employees care deeply … we came away from it as a new leadership team that, ‘okay, this isn’t the right decision for us.’”
The company has since “updated” its corporate values, the CEO says, although the whistle-blower was let go. Mr. Keiser said Hootsuite cannot have employees publicly revealing internal corporate decisions while they are being made.
Mr. Keiser told The Globe a year ago it would take him up to 18 months to find “a more clear path” for Hootsuite and prove social-media management was a “real space where you could build a full business” with sustained growth and not just a niche provider of marketing tools that would make Hootsuite a better fit within a larger software company.
Mr. Keiser now thinks Hootsuite, with 210,000 paying customers, indeed has solid enough long-term growth prospects to become a giant in its own right, and is less than a year away from achieving his objective of 30-per-cent growth. “That’s where high valuations come from,” he said. “We’ve got work to do to get there. Once we’ve demonstrated that long enough, then come opportunities for us to get to the valuations like what Sprout and Sprinklr have been able to pull off. We believe it is well within our reach.”
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