Ten years ago, three friends wanted to work for themselves so started a traditional staffing company. Over the years, they have pivoted, divested, acquired and otherwise built the company into several Texas-based offices that offer three comprehensive business solutions and serve 44 states. As a one-stop shop, they offer solutions in human resources, IT and recruiting. Russ interviews Michael Hopkins, co-founder of Employer Flexible.
Russ: Welcome back to the BusinessMakers Show brought to you by Comcast Business, built for business. My guest today Michael Hopkins co-founder of Employer Flexible. Michael, welcome to the BusinessMakers Show.
Michael: Thanks for having me.
Russ: You bet. Tell us about Employer Flexible.
Michael: Well we've been here ten years so I can't believe it's already been ten years and started in November of 2003. I had a meeting just the other day with a guy that I had lunch with ten years ago at Employer Flexible which kind of blew my mind for a little while but in ten years we've done a lot of things at Employer Flexible. We started as a traditional staffing company. We grew that into a staffing company and PEO. If you're not familiar with that that's a professional employer organization or HR outsource company. From that over the last ten years we've divested our temp staffing business in today and acquired an IT outsource company. So today that's a lot in one small bit but we're a comprehensive business solutions company that has three solutions, HR solutions, IT solutions and recruitment solutions and we think it's a nice mix that's going to bring a lot of value and cross sale to our customer base.
Russ: Ok and IT services, that's the newest component?
Russ: All right.
Michael: IT services to us is a - we acquired a company that had been around for 13 years. They were a vendor of ours so we actually got to see the company from the other side.
Michael: We've got to know those partners really well and acquiring and bringing those guys on board we're able to keep the expertise in place but leverage the platform that Employer Flexible has built so IT solutions to us means managed IT. You go into a small to midsize company and you outsource their IT just like you would HR. They've got another piece of their business that I think is going to be pretty powerful and that piece is the analytics business. So their analytics software is what we use to drive out entire company. So we actually needed that proprietary inside the company but it allows us to aggregate data from all of our systems and today you get systems across the board. You get systems in - your phone system is a server. Your customer relationship manager system is a server. Your accounting system is a server so we take all of this data and we put it into one central hub that allows us to get real time better reporting so that we can make better decisions and our clients can make better decisions.
Russ: Ok and the name of that company is or was?
Michael: It was Channel Dynamics for 13 years and we changed it to as of last year to Empact IT. That's Empact with an E.
Russ: Ok. Wow. Empact IT. So you operate companies outside of the name of Employer Flexible.
Michael: Yeah. It's Empact IT an Employer Flexible company and that's the first one we've rebranded so Employer Flexible has actually moved up to be that comprehensive business solutions and then you'll have different solutions underneath that.
Russ: Ok. So do you have other names now or is that -
Michael: We don't have other names now but if you completely build the brand out as it grows you could see other names come.
Russ: Ok. Well congratulations on 10 years. That's quite impressive. I've followed you guys for quite some time and it's a major success story in my opinion so and you seem to enjoy it.
Michael: Everybody gets the seven year itch. I think that's a real, a real thing but I've come to not only enjoy it but appreciate the position we're in and we're just trying to take advantage of what we've built here.
Russ: Ok. Well I noticed that when you described it today, the three components, you don't use the word PEO anymore. Don't you still fall under that category as well?
Michael: We do. We have a PEO and PEO in my mind is going into smaller to midsize companies so that 10 to 300 range, 10 to 500 range but HR outsourcing also includes ASO. And ASO allows us to go into a midmarket so it's kind of gone from PEO to more of a HR outsourcing probably lends to our strategic people that we have in place, the products that we have in place, services and now we're servicing clients that are outside of that PEO.
Russ: And what's ASO stand for?
Michael: Administrative Service Offering.
Michael: Where we can go in and do everything under the tax ID number of the client, not the tax ID number of Employer Flexible.
Russ: Ok. Real interesting. So along the way you've certainly pivoted as we like to say several times but has it been a piece of cake the whole way all ten years?
Michael: Absolutely. We've not made any mistakes. It's been easy sailing so - No. We've made every mistake I think we could make and I think we've learned a lot. It's the first of the year so everybody kind of reflects at the end of the year. That's just happened to us and I think that ten year mark, it really has rung a bell for us that says "All right. What have we done here and what are we trying to accomplish here? And what have we done well and what can we do better?" I'm very proud of what myself and my partners have done. I think we're on the right track. I think we've built a very complex small business. We have 150 employees today which means that this thing has to grow. It's too complex not to grow but yes, I'm very proud of where we are and I'm excited with the next ten years.
Russ: Ok. Now I introduced you as co-founder.
Russ: You mentioned your partners. I believe there's three of you.
Russ: Who are the other two guys?
Michael: So we've got Mike Greathouse and Chris Dollins and myself have all been here since the beginning. We kind of operate in different spaces but you learn to appreciate your partnerships along the way.
Russ: Ok. Well not all companies or not all partnerships learn to appreciate them too so that's quite impressive the three of you have stuck together. Take us back to the beginning. What triggered it like "Hey. Let's get together and do it this way"?
Michael: Well I need to come up with a better pitch here but it's not very smart to do what we set out to do. Reality is we didn't have as much to lose. We were pretty young. Yes, we knew we wanted to do something and so we were very good at taking advantage of kind of things that were right in front of us. Over time we've learned to mold and bend those into things that fit together and I believe that we're building something that makes a lot of sense across the board having the three solutions but from the very beginning it was just about we wanted to be entrepreneurs. We wanted to work for our self. We saw opportunity so we went and took that opportunity and it was not always an easy road.
Russ: Ok. Now there's three categories of business that you're in today but there's a lot of overlap too but do the three of you divide those responsibilities up equally?
Michael: It's a divide and conquer. It's also we share building and growing with each other. We're kind of a sounding board for one another and I do appreciate those guys. Out of the three of us we are very level headed. I think we have a high respect for one another. Some of us look forwards, some of us look backwards, some of us look at today and I think that having that nice balance has helped us. I can promise you that we would not have been able to get here without all three of us pulling the rope.
Russ: Ok. But do you ever get to an issue where "Ok. Let's bring it up for a vote."
Russ: And two votes wins and one loses.
Michael: Yeah. Yeah. In some sense you think that having three you actually get an ice breaker or somebody's always going to break the vote.
Michael: Somebody told me out of San Antonio. There's a guy there named John Dini and he runs the Alternative Board in San Antonio which is a very bright guy. But he said that sometimes it's not the case. He said "One's actually leaning to get the vote for the other one so you don't get the best debate that you might think you'd get." In our situation there's times that we've had an argument or a challenge or something we've tried to work through and then we go to lunch after that so it's not that difficult. Everybody here has the right intent. We're all pulling the rope in hopefully the same direction. This partnership has been a very good partnership.
Russ: Well congratulations on that as well. So doing business just in Houston?
Michael: We finished our model so our model's always been to go after Texas based companies.
Michael: So we have offices in Dallas. We have offices in San Antonio. Austin just opened and Houston and that's our model. We've had opportunities to go to Atlanta, to go to Chicago, to go outside the state and I think there's enough business here for us and enough challenge here for us where we can be satisfied just staying with Texas based companies. What that means today, just 'cause they're Texas based doesn't mean they're not worldwide or even across all the states.
Michael: I think we're doing business in 44 states right now.
Michael: But primarily they're all, unless they've been acquired, they're all still Texas based.
Russ: Ok. And which of those other Texas markets other than Houston is gaining the most traction for you?
Michael: San Antonio and Dallas are both doing very well.
Michael: Austin opened in late 2013 and we're excited to have that on the ground and we expect for that to be a very fast growing market.
Russ: Ok. If I were to choose a state where I really wanted to be anchored I've got to choose Texas too.
Michael: Yeah. I don't know if that was our choice but we're happy to be here.
Russ: Ok, Michael. Share with me what you see as the long-term vision and plan for the company.
Michael: We want quality. It's not about quantity. And I think there's a perfect size to every company and Employer Flexible could be that perfect size and we're really working hard to be that perfect size which means that we've got enough volume that we can go out and get the technology that we need, the expertise that we need and have the processes in place that we need but not lose touch with our customer base. So going off of that we're going after a small to mid even large client base. We're truly segmented but I like the leverage point. So if we go into an account today or typically we close 25 percent of the accounts that we get to the proposal state which I think is a pretty high close rate.
Russ: I agree.
Michael: But there's 75 percent of them that we had a very good conversation with that may not be a fit for that particular solution that I think we can actually help at the same time.
Russ: Ok. You must have discussions about exit strategy. Can you share that with us?
Michael: Exit strategy for us is something that we talk about but I'm not sure we know is real. I'm 35 years old so at this point exit is something that we all think about. It's smart to think about this but it's not a driving factor and I'm the middle age of the three partners so at some point we are building a solution to last and if somebody - if we're better fit blending into another company or a better fit for we think a company can take us further it's always an option but today it's not a driving factor. Today is about securing customers, retaining customers and providing the service that we want to provide.
Russ: Which also means -
Michael: It's all about the chase.
Russ: Which also must mean you like what you're doing.
Michael: I do like what I'm doing.
Russ: All right. Michael, I really appreciate you sharing your story with us.
Michael: Yep. Thank you.
Russ: And that wraps up my discussion with Michael Hopkins, co-founder of Employer Flexible, and this is the BusinessMakers Show, heard on the radio and seen online at thebusinessmakers.com, brought to you by Comcast Business, built for business.