The digital marketing technology company Scorpion is one of the least visible major players on the local landscape. And, at least until recently, this was by design.
“Scorpion is a relatively sizable company. And no one knows this,” Scorpion CEO Daniel Street told Localogy Insider in a recent interview. “Because to date, we haven’t put any effort into branding. No effort into getting the word out.”
Despite this, Scorpion has grown rapidly into a company with 900 employees and more than 13,000 customers. A large portion of Scorpion’s employees are engineers. Now, with fresh funding and a revamped management team, the company looks to scale up even faster and plans to grow both its product and sales capabilities.
Scorpion’s digital marketing platform serves multiple vertical categories. But it has a particular focus on legal, home services, medical, and franchise businesses.
Time to Scale
Street recently joined Scorpion to lead it to the next level. He takes over as CEO from company founder Rustin Kretz, who removed himself from the helm to focus on his real passion, product.
When we covered Scorpion’s fresh $100 million funding round last month, we described it as an impressive raise. We recently spoke with Scorpion’s new CEO Daniel Street, and he didn’t see it that way. In fact, he told us the company could have raised a lot more had they not gone to the well in the midst of a pandemic.
“I would actually say that $100 million is less than that we would have raised today,” Street told us. “We raised that round during the heart of the pandemic. And that hundred million dollars was intended to go towards the product organization, getting more AI developers in particular, and then also expanding our sales and marketing footprint.”
This observation came toward the beginning of a wide-ranging conversation with Street about Scorpion and the role it plays in the local commerce ecosystem. Not to mention its ambition to use technology to fuel its growth. We also talk about the company’s recent decision to leave sunny Southern California for the Silicon Slopes of Utah.
Here are some highlights from the discussion.
On Solving Small Business Pain Points
Street says a big part of Scorpion’s mission is to help small businesses get digital marketing results with whatever budget they have to work with. This requires using AI to apply what the company learns from running campaigns across 13,000 customers to spend client’s money effectively.
“The biggest problem that SMBs are facing is they are wasting their money,” Street said.
He said that between fees and overhead and ineffective ad spend, small business digital marketing budgets often quickly disappear without delivering any value to their owners.
He argues that the challenge that many agencies face in getting results is that many, if not most SMBs are working with very limited budgets, which offers no room for error.
“So you’ve got small budgets and a really high need for being very precise about how you spend it. That to me is the biggest problem,” Street said. “And that is what we’re trying to solve. To do that we have to build as you can imagine, a giant AI infrastructure. And what that does is it learns from all the different customers that are trying to do things.”
Street illustrates this with an example.
“Somebody in the Des Moines, Iowa, suburbs has very different dynamics, what they invest in is going to be very different than somebody who’s living in Chicago. That’s partially due to the competitiveness of the advertising. That’s partially just due to where people look for their reviews and where people go online and try to find somebody,” Street explains. “So there are just fundamentally different dynamics even within one vertical. Within landscaping, there are different dynamics by geography. And that cannot be solved by a human. It’s too complicated.”
The answer, Street argues, is an AI infrastructure that learns from campaigns across the platforms to adapt to these variables that are too complex for any one human being to wrap their head around.
“We have sufficient data to know what works. We know what works in individual areas and individual geographies. And we know works in every single industry,” he said.
On His Transition to CEO
Street faces a challenge common to CEOs coming in from the outside to scale a startup. How to coexist with a founder who has voluntarily given up the helm. In Scorpion’s case, the founder is Rustin Kretz, who as noted is moving into a product role after leading the company for almost 20 years.
Street says this was a move that Kretz insisted on, despite initial efforts by Street and others to talk him out of it. But Rustin’s realization, which Street acknowledges, was that as companies grow, the CEO’s job changes. And that makes it increasingly difficult for the company’s product leader to also lead the company. Kretz recognized that something had to give.
“Rustin said, ‘Listen, our success going forward is based on having the absolute best product. If we have the best product, the best technology, that is what’s gonna make us win’,” Street recalled. “As the company gets bigger, the CEO job transforms. It’s no longer about trying to figure out the right solutions or even setting strategy. A lot of it’s about managing constituencies and making sure you deal with HR problems, and all the bureaucracy and problems that come from being a 900-person company.”
On Ramping Up Sales
As Street describes it, Scorpion has for its history been a largely product-driven company. After all the company was founded by a true product person in Kretz.
This product focus has paid off with a high retention rate that has been the company’s key revenue driver. He said when he first met with Scorpion about three years ago, the company’s gaudy retention rate was the metric that jumped out at him.
“We were averaging 96% net retention. And it was 112% on a revenue basis,” Street said. “When you have such great retention as a fundamental of your business model, it allows you to grow quickly, almost by accident, because you’re just you’ve never losing anybody along the way.”
So the company has lived mostly on retention to this point. But Street said the time is right to invest some of that $100 million in sales.
Scorpion will get a natural revenue lift from adding to the sales body count, Street said. But they are also applying their technology to improving sales efficiency.
“We are running AI-based optimizations of [customers’] marketing campaigns,” Street explains. “We look at their entire digital presence. Everything from Google reviews, to their websites to every piece of their online presence. And we give them a very clear diagnostic of where they fall short and offer clear action steps on how they can improve it.”
Street says the sales teams will be armed with this data to close sales faster than ever before.
“It’s going to be less going out pitching somebody on why we’re different,” Street said. “And more showing somebody, very clearly, that this is what you’re doing and this is how much we can improve it using our AI systems.”
On Moving to the Silicon Slopes
We also asked Street about Scorpion’s decision to relocate from California to Utah. The decision comes amid the broader business narrative about remote work and California’s weakening grip on the tech industry.
He said it largely came down to the quality of life for his employees.
“The number one reason is the cost of living. It makes our employees stressed out. It’s hard to live in California. The quality of life is becoming difficult,” Street said. “So that is reason number one, number two, and number three. But if you want a reason number four, the business environment in California is difficult to operate in. There are a lot of legal restrictions in California, which don’t exist in other parts of the country. And complying with them takes more lawyers than we have the ability to invest in.”
Street added that the decision had as much or more to do with moving to Utah as it did with leaving California.
“More importantly, Salt Lake was just a great fit,” Street said. “There’s a bunch of people in our space that are consolidating in the Salt Lake City area. So it’s about being able to partner with those people, and also have access to an employee base that knows the space.”