What It's Like When Your Startup Suddenly Becomes Worth $270 Million

yext employeesThumbs up all around after the big $27 million announcement.

Photo: Daniel Goodman via Business Insider

Last night we got to be flies on the wall at Yext when it announced some big news to its 85 employees:Yext raised $27 million at a $270 million valuation.

Investors in the Series E round include Rick Scanlon’s Marker, CrunchFund and existing investors Sutter Hill Ventures, IVP and WGI Group.

“This is a watershed moment,” CEO Howard Lerman explained to a the room crammed full of 20-somethings. “No one thought we’d be able to do this.”

That’s because 18 months ago, Yext spun out its profitable pay-per-call advertising business, Felix, and took a gamble launching an entirely new company. The new company, PowerListings, would update business listings across the web at lightning speed, and businesses would pay $499 per year for the service.

Felix generated $30 million per year with $6 million net to the company. “Most people would settle for a $100 million+ business,” Lerman told us. To test fate again with an unproven, new business seemed a little crazy.

But Yext PowerListings has done better than anyone could have predicted. PowerListings is already used by 50,000 paying locations. (If all of these clients are paying $499, it’s ~$25 million in revenue. Some of them are probably getting a discount, though.) About two-thirds of its customers are small businesses and the rest are chain stores. Since September, 950,000 business listings have been updated by Yext.

Lerman told the room that the $27 million validated Yext’s decision to spin out the new company all those months ago. The entire financing is for Yext PowerListings, not Felix.

As he broke the news, the room erupted in applause. Lerman joked that the money would be put towards executive bathrooms with gold toilets and Spanish banks.

It actually will be spent growing the business, starting with a big ad campaign that will let small businesses known how Yext can help them.

We arrived at Yext a little after 5:30 yesterday afternoon. It's located in Chelsea Market on 15th and 9th in New York City.

Upstairs, we found a room full of Yext investors waiting to drop the news on the employees. There's Mike Walrath with a cup of coffee; he flew in for the announcement.

Meanwhile, the 85 employees were busy working, unaware anything was up.

Most of the employees at Yext work in sales and help onboard businesses. Brooke Sabghir is one of the sales managers and she has been at Yext for 2.5 years.

Sales people who hit or exceed their marks get to spin the wheel for a prize.

And if they do really well they get their name on the plaque.

Here's The Situation Room, where the impending all-hands meeting will soon be held.

CEO and Cofounder Howard Lermon has a PowerPoint presentation all ready to go.

While they get situated, we continue checking out the office and head over to the kitchen.

A solid coffee maker.

And a stocked fridge.

We check in with Yext Co-founder and President Brian Distelburger (right) who is showing CFO Alok Bhushan (left) some impressive numbers.

And then it is back into the Engineering sector. It is fun back here. The hanging monkey was a prize from a team outing to Dave and Buster's, the adult style Chucky Cheese.

Austin Chu has been a Software Engineer at Yext for two years. He came to the company directly from MIT.

The company made these Rubix Cubes as a promo, but once the engineers saw them they all had to complete them.

They have also been working on this massive can pyramid for about a month.

The team is pretty close knit and values their relationships.

And it is time for the big meeting.

Lerman starts off the talk.

The team still doesn't know where it is going though.

Lerman is getting closer to the big announcement.

And everyone is pretty stoked when it comes.

That's a lot of money!

Big valuations equal big smiles!

Lerman with the company's newest major investor.

After the meeting, dinner arrives! The company provides lunch and dinner daily for the office.

No partying after the news, it is back to work. Sara Myers is on the Enterprise Operations Team and has been with Yext since February.

The mood in the office is fairly festive at this point.

CTO Sean MacIsaac (right) and Software Engineer Rich Hong (left) stand in front of some of their creations.

Pretty sweet lego ship!

They didn't need to use these shot glasses today.

We stop in to chat with Temy Mancusi-Ungaro, Yext's VP of Operations.

He has an impressive nerf arsenal.

The team is busy eating and working as we head out.

While Yext CEO Howard Lerman plans the company's next big move.

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