Rick Post: Running a small public company is expensive.
CEO Rick Post says the company, whose bread and butter business is selling Internet leads to car dealers, needs to become bigger.
Post, 45, discussed Autobytel's future in a telephone interview with National Editor Chaz Osburn.
Why are you exploring Autobytel's options now?
I think we're the only public company in our space, directly in this area of dealer-Internet related products. You have Reynolds and Reynolds and ADP certainly, but we're the only one focused on driving dealers (Internet) traffic. We say we'll do between $126 million and $130 million this year -- that's small for being a public company.
We spend in the neighborhood of $4 million to $5 million a year to be a public company. That's a significant amount of money on our revenue base. I have said that we need to do something to minimize the expense of being public. In terms of public company costs, there would be very little incremental cost to us for being significantly larger because all the processes are going to be the same unless we enter a completely new line of business. Whatever we do within our current environment we would be doing in a larger size also.
What is driving those expenses?
The regulatory changes that have occurred around what you have to do to validate your internal control process: Sarbanes-Oxley. It's not just how you get a contract in process. It's everything that can touch your financials. We have to do the same thing IBM does, but we have fewer resources to do it in terms of documenting it and tracking.
What Merrill Lynch is doing leaves you a lot of leeway, from acquisitions on one hand to a merger or possible sale. Why?
I'm a believer that you have to maximize value for your shareholders. Every company has three main constituents: our customers, our shareholders, our employees.
As we think about the options, we look at whether there are any businesses within what we currently do that we could acquire and gain additional scale to offset some of these public company costs and create product innovation and new services for our customers. Whether that would allow us to grow and stand alone and be a dynamic company going forward.
We're also looking at whether there are other capital structures that might create a different structure for us. We're looking at partnering, joint venturing.
We anticipate we'll also include people who are interested in acquiring our assets because I think we have valuable assets. I think we've created a strong business model, and there's a lot of growth ahead of us. But doing it at our size we just need to be bigger. We need to be significantly larger.
How much larger?
I think over the next one or two years, whether we're independent or combined with someone else, I'd like to see us 50 percent to two times our size. I'd like to see if we could double revenue. But it won't all come from organic growth.
What are you telling dealers?
That it's good news for them. Because the stronger we are, the more resources we have, the more innovative we can be.
How much of your revenue comes from lead generation?
It's right around 62, 63 percent tied to our lead business. Now that's down from a few years ago when it was like 80 percent.
You've been getting into other areas such as customer relationship management software.
We're trying to diversify our revenue and not be dependent on one source of revenue. The bottom line is we believe that if we can get larger, we can be a more dynamic player for providing services for our dealers. If we can't do that, then we're going to become marginalized. Other people will come in and do it for us.
Is this the toughest decision you've had to make since becoming CEO?
It certainly ranks right up there. It's very disruptive for any organization to take on something like this.
You may e-mail Chaz Osburn at [email protected]