[credit provider=”Daniel Goodman via Business Insider”]
Yext, a startup that maintains listings for businesses across the web, sold the profitable arm of its business, Felix, to IAC.Yext sold Felix, a pay-per-call advertising business, so it could put 100% of its focus on its business listings.
All Felix employees will be moving over to IAC. Yext co-founder Brent Mentz is going with it as Felix’s new CEO.
No deal price has been announced, but Leena Rao at TechCrunch says Yext sold for $30 million. She also reports Yext is on track to do $30 million in revenue this year.
Selling for just 1X revenue doesn’t seem like that great a deal.
We spoke with Howard Lerman this morning. He didn’t confirm the sale price, but he didn’t deny it either.
He also said the deal was more strategic than “economically rational.”
“We made the decision to find the right home for this business,” says Lerman. “It may not have been the most economically rational decision but we did it for two reasons. 1.) Because IAC is a great company and a great place for our employees to land. 2.) It allows us to achieve strategic focus. Now we can totally focus on creating market value for Yext.”
Yext recently raised $27 million at a $270 million valuation. Lerman says he wants to increase the valuation by at least 10X.
But the decision to sell off Felix wasn’t easy. The idea was first planted in Lerman’s head after he met with Ben Horowitz last year. Horowitz suggested Lerman sell Felix to fund Yext’s new business initiative, PowerListings.
At first, Lerman thought it was too risky. Felix was 90% of Yext’s total revenue. PowerListings had a little traction, but it was too early for Lerman to bet the farm on it.
Eventually Lerman took Horowitz’s advice. Now PowerListings is used by 10 Fortune 100 companies and it updates listings for 70,000 businesses. In less than a year it has updated 1.2 million listings for its clients. Lerman says selling Felix has given Yext a “warchest” to grow PowerListings.
“Aren’t the best bets are the crazy ones?” Lerman says.