Year In Review

Summary

Podcast Summary: From the Ground Up – Year In Review

Hosted by Inc. Magazine’s Diana Ransom and Christine Ligorio-Chafkin

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Introduction

In the final episode of the season, titled "Year In Review," Diana Ransom and Christine Ligorio-Chafkin, along with special guests Inc. Senior Editor Tim Creno and Staff Writer Sarah Lynch, dissect the most impactful business news of the past year. Skipping the usual advertisements and intros, the hosts dive straight into significant discussions ranging from massive tech layoffs to the evolving landscape of Diversity, Equity, and Inclusion (DEI), generational workplace dynamics, political influences on business, and emerging trends in the crypto economy.

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Changes at Inc. Magazine

[02:01] Diana opens the conversation by highlighting internal transformations within Inc. Magazine. Christine announces the appointment of Mike Hoffman as the new Editor-in-Chief, praising his deep-rooted knowledge of the brand and his contributions to refining the publication’s coverage. Additionally, the team celebrates the upgrade to a new podcast studio, enhancing the podcast’s sound quality and overall vibe.

Notable Quote:

“He knows the brand through and through. He had been a writer and an editor and kind of created the website as we know it now at Inc.” – Christine Ligorio-Chafkin [02:15]

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Highlights from the Inc. 5000 List

Christine discusses the Inc. 5000 list of the fastest-growing companies, emphasizing diverse sectors witnessing exponential growth. Notable companies include:

• No Tie, Shoemaker Kizzik – A trendy shoe manufacturer.
• Coterie Diapers – Innovators in the baby diaper market.
• Manhol Covers – Leaders in direct partnerships.

She highlights trends such as luxury products enhancing quality, the influence of social media, and significant growth in healthcare services. The standout company, Vitalize Health, is recognized as the fastest-growing company in the country, focusing on value-based healthcare to improve preventative care for the aging population.

Notable Quote:

“We're in it right now. It's our first full year of this From the Ground Up podcast.” – Christine Ligorio-Chafkin [03:09]

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Gen Z in the Workplace

A substantial portion of the discussion centers on the struggles Gen Z faces in adapting to modern workplaces. The hosts reference a recent appearance by Simon Sinek on the podcast, where he attributed Gen Z’s challenges not solely to their generation but significantly to managerial shortcomings.

Key Points:

• Values Mismatch: Gen Z prioritizes meaningful work and justice, diverging from previous generations' focus on sheer work ethic.
• Managerial Responsibility: Managers are urged to provide clearer direction, ongoing feedback, and support to Gen Z employees.
• Manager Burnout: Middle managers are experiencing high levels of burnout, exacerbating tensions with younger employees.

Notable Quotes:

“Companies are upset with how employees are performing. Can we blame generational differences? Sure, that's a component, but companies bear more responsibility than they're taking on.” – Simon Sinek [07:00]

“Gen Z needs feedback. They do expect to be parented a little bit more than their predecessors.” – Sarah Lynch [10:03]

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DEI Backlash

Tim Creno and Sarah Lynch delve into the backlash against DEI initiatives that intensified after the Supreme Court’s 2023 decision to overturn affirmative action. This backlash has led to numerous lawsuits targeting both educational institutions and corporations, resulting in reduced DEI hiring and altered program languages.

Key Developments:

• Legal Challenges: Organizations like the Fearless Fund and Hello Alice faced lawsuits questioning the legality of race-based programs.
• Political Influence: The 2024 election and figures like Donald Trump have fueled anti-DEI sentiments, complicating corporate DEI efforts.
• Corporate Adjustments: Many companies are diluting their DEI language to avoid litigation, though true DEI commitments remain intact.

Notable Quotes:

“They're not talking about it. They're not hiring for it. DEI related job postings have gone down.” – Tim Creno [26:13]

“Gen Z is very committed to diversity. That's come up in multiple surveys as well.” – Tim Creno [29:47]

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Tariffs and the Crypto Economy

The episode explores the impact of proposed tariffs and the resurgence of the crypto economy:

Tariffs:

• Proposed Rates: Broad-based tariffs of 10-20% on imports and 60% specifically on Chinese goods.
• Industry Impact: Sectors like agriculture, retail, and manufacturing are bracing for significant changes.
• Business Responses: Companies are importing goods pre-tariff or finding alternative supply chains, potentially leading to a warehouse boom.

Crypto Economy:

• Market Fluctuations: Cryptocurrencies like Bitcoin and Dogecoin are experiencing renewed interest and volatility.
• Regulatory Focus: Appointments like Paul Atkins as SEC head and David Sachs as Crypto and AI Czar indicate increasing governmental scrutiny and potential regulation.

Notable Quotes:

“What's going to happen is a lot of businesses, especially in our orbit, will be rocked by these tariffs.” – Sarah Lynch [35:10]

“Crypto is not crashing yet. It's going back up.” – Sarah Lynch [33:39]

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Optimism and Future Outlook

Despite the challenges, there is a palpable sense of optimism among entrepreneurs. The hosts highlight a surge in startup activity, particularly among those laid off from major tech firms who are now venturing into founding their own companies.

Key Insights:

• Startup Boom: A survey revealed that 63% of laid-off tech workers have initiated new ventures.
• Funding Climate: While uncertainties remain, there is hope for improved funding environments in the coming year.
• Entrepreneurial Spirit: Small business owners exhibit renewed optimism, breaking past three-year lows in confidence.

Notable Quotes:

“This next year is going to be really exciting. People are kind of excited to see, okay, is funding going to loosen up a little bit?” – Christine Ligorio-Chafkin [06:26]

“Entrepreneurs seem to be feeling really optimistic right now.” – Tim Creno [38:56]

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Legacy Award Interview: Stephen Marsh of Smarsh

The episode culminates with an inspiring interview with Stephen Marsh, founder of Smarsh, who received the inaugural Inc. 5000 Legacy Award presented by Glenfiddich. Marsh shares his journey from a small consultancy to a $500 million company, emphasizing the importance of innovation, strategic acquisitions, and maintaining a unique company culture.

Highlights:

• Early Success: Smarsh made the Inc. 5000 list 17 times since its founding in 2001.
• Strategic Growth: Marsh credits growth to both organic innovation and key acquisitions, particularly in AI.
• Legacy Vision: His goal is to build a lasting company that continues to evolve and serve customer needs effectively.

Notable Quotes:

“We have a very unique culture… I want to see it reach its maximum potential.” – Stephen Marsh [52:18]

“An archive can become a large language model.” – Stephen Marsh [52:05]

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Closing Thoughts and New Year’s Resolutions

In a light-hearted conclusion, the hosts and guests share their New Year’s resolutions, reflecting personal goals amidst the professional discussions. This segment adds a relatable and personable touch, showcasing the human side of entrepreneurship and leadership.

Notable Moments:

• Diana aims to improve her diet and skincare.
• Christine plans to get her kids to eat healthier and enhance her fitness routine.
• Tim aspires to read more books and train for a half marathon.
• Sarah commits to becoming a morning person and running a half marathon.

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Conclusion

"Year In Review" offers a comprehensive look into the multifaceted challenges and triumphs of the past year in the business world. From navigating generational workplace dynamics and DEI controversies to tackling political tariffs and embracing entrepreneurial resilience, Inc. Magazine provides invaluable insights for founders and entrepreneurs gearing up for the future. The episode concludes on an optimistic note, celebrating success stories like Stephen Marsh’s Smarsh and encouraging listeners to embrace their New Year’s resolutions with determination and positivity.

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Notable Quotes Recap:

• Christine on Mike Hoffman’s impact: “[...] He knows the brand through and through [...]” [02:15]
• Simon Sinek on managerial responsibility: “Companies are upset with how employees are performing. [...]” [07:00]
• Sarah Lynch on Gen Z’s work ethic: “Gen Z is very committed to diversity. [...]” [29:47]
• Stephen Marsh on company legacy: “We have a very unique culture… I want to see it reach its maximum potential.” [52:18]

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For professionals seeking to stay abreast of business trends and entrepreneurial strategies, this "Year In Review" episode of From the Ground Up is a must-listen, offering both critical analysis and inspiring success narratives.

Transcript

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[Diana Ransom]

I'm Inc. Executive Editor Diana Ransom and.

[Christine Ligorio Chavkin]

I'm Editor at large Christine Ligorio Chavkin.

[Diana Ransom]

This is from the ground up.

[Christine Ligorio Chavkin]

Today's episode Year in Review.

[Diana Ransom]

For our last episode of the season, we brought in Inc. Senior editor Tim Creno and staff writer Sarah lynch to talk over some of the biggest business news topics from the year.

[Christine Ligorio Chavkin]

Yes, we talked about the many, many layoffs in the tech sector. We talked about DEI backlash and generational workplace warfare. Also, in the aftermath of the election, we just had to talk about some of the hot button topics for 2025, like Trump's proposed tariffs, the new wave of the crypto economy. I'm calling it that. I'm calling it that. And you know, things we, we also talked about, things feel optimistic about.

[Diana Ransom]

But we started the conversation by reflecting on the changes that have taken place right here at Inc. So, Christine, we wanted to start off this show by talking with you a little bit about what are some new changes at inc. What have we witnessed this year?

[Christine Ligorio Chavkin]

Yeah, the updates from the Inc. World. We've actually had several big changes at Ink, I think. First, it's worth mentioning we have a new editor in chief, Mike Hoffman, and he's been here most of the year now. Is that right? Half the year.

[Diana Ransom]

Right.

[Christine Ligorio Chavkin]

And I think it's just been a tremendous longstanding anchor. Well, he was an anchor back a decade ago maybe, and so he knows the brand through and through. He had been a writer and an editor and kind of created the website as we know it now at Ink. And so and now he's back. So he's been a great asset to us editorially and helping us hone our coverage. We also, if you notice that we sound better and maybe are more relaxed. It's because we have a new podcast studio and we are in it right now.

[Diana Ransom]

We're in it right now.

[Christine Ligorio Chavkin]

It's up to us too.

[Diana Ransom]

Yeah, it's great. It's black.

[Christine Ligorio Chavkin]

It's black. Yeah, you all are black.

[Diana Ransom]

I need chairs, ladders.

[Sarah Lynch]

It's a large padded room. So, you know, I feel comfortable.

[Diana Ransom]

There's stuff for everybody here and it's.

[Christine Ligorio Chavkin]

Been our first full year of this from the ground up podcast, Diana. So it's been a pleasure working with you on it.

[Diana Ransom]

And you, Christine. Thank you.

[Tim Creno]

Yeah.

[Christine Ligorio Chavkin]

I think the big notable thing for me sort of in our world and what we cover and editorially was the ink. That's our list of fastest growing companies that are at least three years old. Some of them had like really, really crazy revenue. I mean, they all had crazy revenue growth. Some of them had crazy revenue. And, you know, being at the conference this year kind of taught me something. Let me tell you a little, a few of the highlights from the list, though. These companies are any kind of business across sectors. We had, you know, the viral no tie, shoemaker Kizzik was on the list. Coterie diapers, a better baby diaper was on the list. There was a company called Manhol covers.

[Diana Ransom]

Direct, I mean, everything, love vendors, best name ever.

[Christine Ligorio Chavkin]

Yeah. Some of the trends I think we saw were these luxury kind of doing something, but a little better and oftentimes a little higher end. We also saw lots of trends in influencing. There was a company that makes software to make you look your best. We had a story about how Bloom Nutrition, which was on the list, saw a boom based on an army of tiktokers supporting their brand. But I do think the biggest trend we saw was in healthcare and services for health, such as an AI tool that fixes a problem with prescriptions. There was company that has kind of reinvented the HSA. And the company that I wrote about for the Inc. 5000 was the fastest growing company in the country. It was called Vitalize Health. And it's kind of a middleman between the government and private practices trying to make healthcare more efficient, especially for our aging population. You'll hear the phrase value based healthcare a lot. And the way this company approaches it is by trying to get seniors in to see their doctors more often, to try to get private practices to actually just interact more with their patients more. So it's so cool. Yeah.

[Diana Ransom]

More with preventative care.

[Christine Ligorio Chavkin]

Preventative, exactly.

[Diana Ransom]

Very important as people age too.

[Christine Ligorio Chavkin]

Absolutely. Also, at the Inc. 5000, I met a company that does. They're a law firm based out of Minnesota, and they've pivoted strictly to doing elder law. I mean, I think that just shows there is. The silver tsunami is here. It's coming, it's here. And a lot of companies are booming that serve our aging population. So Also at the Inc. 5000, I guess I wanted to say, like, this has been a year of extreme kind of volatility in the labor market, which we will talk about, insecurity amongst workers, which we'll also talk about. But at Think 5000, did you guys feel that? Like, I kind of didn't feel that very much.

[Diana Ransom]

It's entrepreneur prom, in a sense, and people are very, you know, celebratory, in a very sort of like, happy mood, generally speaking. I definitely got the vibe that people were doing well and they were. They were ready to celebrate. Right.

[Christine Ligorio Chavkin]

And these are, of course, the companies that are succeeding and had a good year this year, Had a good few years. But I do think these anxieties generally creep in and we generally can feel them. So I don't know, just going on vibes alone, I would say, like, the forecast there, anything to take away from it is like, I think this next year is going to be really exciting. People are kind of excited to see, okay, is funding going. Is the flow of funding going to loosen up a little bit? Are some of these insecurities about the labor market going to loosen up a little bit? And I definitely was feeling that sort of excitement.

[Tim Creno]

I think what's really interesting about this year's Inc. 5000 crop, and we've talked about this as a staff, were that these three years of revenue growth which got these companies on the Inc. 5000, were all in the aftermath and in the midst, really, of COVID for some companies that led to huge growth, huge success, and then coming out and things started to normalize again. Trying to figure out how their growth was going to sustain, be maintained is something that I feel a lot of the companies I spoke with at the 5,000 were really reckoning with.

[Diana Ransom]

Yeah. And maybe that sort of adds to the vibes, you know, like, people felt like they'd been through the worst.

[Tim Creno]

Yes. But now what is our new normal?

[Diana Ransom]

Yeah.

[Christine Ligorio Chavkin]

I mean. And they were ready to party, right? Yeah.

[Diana Ransom]

It's a sight for sure. It's definitely a scene, too. So one trend that's been on my radar is the tough time Gen Z has been having. You know, folks are getting laid off in high numbers a lot more than we've seen in younger generations than in the past. And we had Simon Sinek on the podcast recently where we talked about this tough time Gen Z is having. And he actually had a counterpoint suggesting that it's not really Gen Z's fault. It's actually managers are the problem and managers are not necessarily stepping up to the plate in the way that younger folks might need.

[Simon Sinek]

Companies are upset with how employees are performing. Can we blame generational differences? Sure, that's a component, but that can't be the whole reason because there's a relationship at foot here and that at the end of the day, it's the people in charge that have more authority anyway to fix the ship. I can't ask a 22 year old and an entire generation of 22 year olds to get their ship together so that this company can work. Well. I think the people who've had more experience and have more authority can take the lead.

[Diana Ransom]

Now.

[Simon Sinek]

Is there responsibility from the younger generation? Of course. They have to step in and play the game as well. If we're gonna ask you to take yourself on and help you, then I expect you to take yourself on and ask for help. And if I show patience, I expect you to do the same. But I think companies bear more responsibility than they're taking on.

[Diana Ransom]

Tim, can you speak to this? We ran a story that showcased some of these troubles that I'm alluding to. What happened?

[Sarah Lynch]

Yeah, I think. Not to pat ourselves on the back, but that story got a lot of attention, which I think to me indicates that this is something on many people's minds. But I think the long and short of it is Gen Z's having sort of a tough time adapting to the workplace. I don't think that's news. What's new is that their managers or the people who employ them are getting sick of it.

[Diana Ransom]

And what are they getting sick of?

[Sarah Lynch]

That's a good question. So I think what it really comes down to is a values mismatch. Number one, Gen Z is a fiercely independent Sarah. I think you can agree, being a member of the cohort.

[Tim Creno]

Yes, that's Gen Z representative.

[Christine Ligorio Chavkin]

Are you officially Gen Z?

[Tim Creno]

I am. Oh, cool.

[Christine Ligorio Chavkin]

You're so mature. Do you have like a badge I.

[Tim Creno]

Am Gen Z written across my face? I'm blending in today. I'm blending in.

[Sarah Lynch]

Yeah. So, I mean, I think what it really comes down to is, as you said, as Simon Sinek said, there's an issue with managers and there's an issue around expectations on both sides. This is a dynamic that's that's being co created both by the Gen Z employees and their Millennial and Gen X and Boomer managers. The long and short of it is each generation has a different set of values, right? So Gen Z, they're fiercely independent, they're very justice oriented. They are just not as into putting their nose to the grindstone and working for no reason. Right?

[Diana Ransom]

Right.

[Sarah Lynch]

They're hard workers, they work hard, but they need direction.

[Diana Ransom]

But are you having conversations like, come to work at 9, you need to come to work at 9am and then you leave at 5, you know, like that's the kind of remedial conversation people say they're having.

[Sarah Lynch]

Right. And that's where it goes back to the values mismatch. Right. Is like Gen Z tends to think that. I mean, I think one thing from that article that really stood out to me was one of our sources said, and she's an expert on, or she runs a coaching business for Gen Z, but one of the things she said is, you know, Gen Z, they sort of came of age during the pandemic, which means they went to college on Zoom, and they didn't get the same socialization that generations before them got. Right? Like college is where you learn to talk to adults. Right. Or it's where you learn to deal with people and cooperate with people who don't share the same values or perspectives as you. And so I think Gen Z ultimately is a little rigid, but they also are almost in a state of freeze and fight and flight where they want to do a good job, but they lack direction. And I think they lack the intuition and they almost sort of lack the social language to ask for help in a way that would provide it. And then on the flip side of things, Gen X and Boomers, I think, are inclined to sort of expect the people, they manage to guess what they want a lot of the time, sort of fill in the blanks to just keep pitching. Right. Even in our industry, it's like, just pitch something to me until I can say yes to something. What's new and what Millennial managers have, I think, started to pioneer is this sort of shift towards, okay, I'm gonna give you more direction. I'm gonna create structure. I'm gonna have those feedback conversations on an ongoing basis and not once every six months. Because as we all know, nothing should be a surprise in a performance review. Ultimately, what it really comes down to is feedback, right? Gen Z needs feedback. They do expect to be parented a little bit more than their predecessors. And that's a level setting. Conversation that needs to happen. Right.

[Diana Ransom]

Well, I think what you were saying in that article is that that is happening. Sure. But it's not happening enough. Right. And so folks are getting laid off in surprising numbers.

[Sarah Lynch]

Exactly. And if you follow the thread, another sort of thing we've discovered this year is middle managers are burned out almost at the same percentage that Gen Z is getting fired. Right. If you're running a company, you have to support your middle manager. You got to give them the resources. And what that looks like is help them prioritize their plates. Right. And then teach them how to do the same thing for Gen Z, for their employees. So the priorities need to flow from the top. The structure needs to be there. And I think it's also important to be realistic. Right. Because millennials, and this is where it goes back to the values mismatches, millennials, I think, were more willing to just work, work, work, work, work, regardless of whether or not to quote a Rihanna song, but regardless of whether or not it made sense. And now Gen Z is asking the question, is this meaningful work? Does this make sense? Is this a good use of my time? And it's a fair question. Right. Don't you. I mean, it's. I think it's right, Sarah. Like, it's good to have.

[Tim Creno]

Yes. And it's interesting how the two are connected. Tim, too. You know, Gen Z is feeling maybe disillusioned from their work and it's actually making them not want to become managers and move up in their companies. That came up in my coverage recently. This trend of conscious unboxing from Gen Z. Yeah. Which is super interesting.

[Diana Ransom]

Yeah.

[Tim Creno]

What is that basically means that they don't really want to become managers and.

[Christine Ligorio Chavkin]

They'Re on bossing themselves.

[Tim Creno]

They're unboxing themselves. Exactly, Christine. And the reason why is they believe that that management kind of role is quote, too high stress and low reward. But from what we're seeing in the kind of surveys that you mentioned, Tim, was it's kind of true. Managers are overwhelmed right now. They're on the front lines of RTO mandates. If your company is instituting those, they're on the front lines of incorporating AI into their teams. If that's a mandate that they are called upon to do, they have a lot going on right now. And Gen Z, in addition to being motivated to work hard, but maybe not for whatever the company decides as a priority, is deciding. I'm out.

[Christine Ligorio Chavkin]

Yeah, that makes complete sense. I feel like I've felt the same way throughout my career.

[Diana Ransom]

I can understand that too.

[Tim Creno]

Are you also, Gen Z.

[Diana Ransom]

Well, certainly burned out, but it's also, it speaks to the idea of, like, doing something you love. And if you're not doing something you love, at the end of the day, what is the point? Yeah, yeah.

[Christine Ligorio Chavkin]

I mean, it's just like a mismatch of the ideals and the job. Right. I think millennials were able to either pick a career they loved or say, I work these hours, I play these hours. Right. There's no. For Gen Z ers. I feel like it's a little bit of a, like, not doing that.

[Diana Ransom]

Mental gifts, not taking the pill. They're not like the red pill, blue pill or whatever.

[Sarah Lynch]

I do think they've taken it too far, though. I have, over the last eight years that I've been at Inc. Managed almost 100 interns.

[Diana Ransom]

God damn, that's a lot.

[Sarah Lynch]

I counted. I did. I went back and I counted. I was like, how many? I mean, I guesstimated, but it's close to that. Something I really have seen in recent years is I've noticed two different kinds of Gen Z interns. One is, tell me what you want me to do, I'll do it faster and better. And I really want this job. I am. I'm doing 10% more. And then there's also. And then there's the Gen Z cohort. That is sort of like, work feels optional, you know, it's just not the vibe today. Sometimes it's fun to watch and sometimes I'm like, no, I get it, girl.

[Christine Ligorio Chavkin]

It's not.

[Sarah Lynch]

It is not. But one cannot live out vibes alone.

[Christine Ligorio Chavkin]

Can that person, can that vibe based employee, like, actually do better?

[Sarah Lynch]

Well, the question is, like, how do you manage them? How do you manage a vibe based employee? Are they adding value even though you have to learn to sort of communicate them with them or motivate them in different ways?

[Diana Ransom]

Well, yeah, that's what Simon was saying. He was talking a lot about, like, inspiring your team and being a little bit more respectful of their different values and their perspectives and just being a little bit more accommodating, but at the same time inspiring them to work harder or inspiring them to be what you think they can be.

[Simon Sinek]

Number one is give them something to believe in. Just like a car doesn't exist just to buy gas. A car exists to go somewhere and gas is the fuel to go somewhere. And the reason we like getting in the car is because we're excited for the journey of the place we're going to go. Well, if a company is a car, a company doesn't exist simply to make money. Money is a fuel. Money is a fuel to go somewhere and give people some sort of excitement that they're going to join your company and go somewhere, see something, do something, contribute to something, give them a reason to come on board, give them a reason to work hard, give them a reason to work late beyond simply more gas. So I think most companies lack clear vision. And you can easily tell just go look at the vision statements on their websites or their purpose statements. And their vision statements say something like, to be a billion dollar company by 2030 or something, which is not a vision and it's only relevant to the people who are going to profit off of that. So give people something that they contribute to that will leave this planet, this company, the society, the people you work with, your customers, somebody in better shape than you found them.

[Sarah Lynch]

Exactly. Yeah. And I've personally found anecdotally, like, if you tell them what's in it for them and you kind of give them things that are both company priorities, but also something that's suited to their interests, it works, right? Like I used to sort of kind of force the issue when it came to, we are a business publication, we write about business. You should be able to cover a broad depth of that and get into the weeds. And there are just some interns that are like, I want to write about climate change, or I want to write about brat marketing, or I want to. And if you let them do it and you coach them on that and you're like, okay, that's going to be your thing, but you're going to do that thing really well. It works.

[Tim Creno]

But you know, it's that idea of inspiring instead of just saying I told you'd so actually came up in the story that our colleague Ben Cherry wrote about the Inc. 5000 survey with CEOs and they shared that inspiring their employees, their Gen Z employees in particular, instead of using fear tactics, was really working out for them. So just saying, the highest growth companies are doing it and it seems to be working well.

[Diana Ransom]

Yeah, no, not a bad idea.

[Sarah Lynch]

Yeah, like Monsters Incorporated, right? Like laughs are more powerful than scares.

[Diana Ransom]

Oh, that's just sweet.

[Brex Ad]

That's so inspiring.

[Christine Ligorio Chavkin]

I love it.

[Diana Ransom]

But it was a tough year, even among the stalwart companies.

[Christine Ligorio Chavkin]

Yeah, Diana. Since 2022. So in the past two years, more than half a million tech workers have been laid off from the biggest tech companies.

[Diana Ransom]

The ones with million.

[Christine Ligorio Chavkin]

Half a million. Isn't that crazy? Meta, Amazon, Google, Microsoft, intel and many, many other companies. But ones that you know Their names, like, that's wild. There's been a huge shift. There's been, you know, the integration of AI into everything. There's been some Gen Z based layoffs. There's been, you know, departmental sh. So half a million tech workers. We had a great story in our magazine by our freelance writer Izzy Lipowski about this. It was called Rebounder Founders. She spoke with one former Twitter employee named Alfonso Terrell, who had returned home from Twitter's LA office in November of 2022 and realized he was locked out of Slack. He realized.

[Diana Ransom]

So he didn't even know.

[Christine Ligorio Chavkin]

Yeah, I actually have nightmares about him. Yeah. The news was sort of circulating like half of Twitter's 7,500 employees had been laid off. It was, you know, around. They knew Musk was coming in. They knew.

[Diana Ransom]

You kind of knew.

[Christine Ligorio Chavkin]

Exactly.

[Sarah Lynch]

They knew it was.

[Christine Ligorio Chavkin]

It was. And you know, Musk shortly thereafter was issuing these ultimatums to employees. I mean, it was very tumultuous. Time was coming.

[Sarah Lynch]

Do you think that set the tone for other tech leaders to do layoffs?

[Christine Ligorio Chavkin]

Interesting. I mean, I think that Brazen, sort of sudden, it was kind of seen as attacking. Right. Like attacking the workforce. And I don't think that Musk is that much. I mean, he sort of stands apart from a lot of how normal companies operate. Right. And should. But I do think that, you know, these sort of ultimatums, that certain we're seeing the Bezos Musk issue saying, hey, you have to be in the office five days a week or here are your new expectations as a worker. I think that those somehow, like, yeah, I mean, the veil down doesn't always go well. But I think some leaders do take that as, hey, I have the liberty to do this now. Right. Like there's a precedent set. And I don't know, I mean, I think that each company needs individual kind of attention and consideration here. They shouldn't necessarily see that as their precedent. But sure, yeah, I think you're right.

[Sarah Lynch]

And I also wonder if it's like if this downsizing in tech sort of needed to happen on set. Like maybe there was a lot of fat to try.

[Diana Ransom]

Oh, sure. There was the right sizing of the operations that they were doing. Maybe they overhired during those periods of high growth. Yeah.

[Christine Ligorio Chavkin]

And those periods of venture capital just flowing and flowing and flowing. I was just speaking with Kevin Ryan, who is the founder of Alicorp. He's a VC now, but he founded Gilt Co. Founded Gilt Group.

[Diana Ransom]

Business Insider, Business Insider.

[Christine Ligorio Chavkin]

Many, many companies. He's seen as kind of this godfather of New York City tech. And he said I was asking him about, you know, to predict the future of funding for next year. And he was like, I don't know. I can tell you that from the past years, not every company deserved that much money. Maybe there's a right sizing that is happening. And I do think that a lot of the larger companies kind of were doing the same adjustments over recent years.

[Diana Ransom]

What did Von Strell end up doing?

[Christine Ligorio Chavkin]

He unsurprisingly ended up founding a new company. If you read this piece, which is fantastic and everyone should read it, it's on inc.com A survey of laid off tech workers found that 63 said they started companies after being laid off.

[Diana Ransom]

Oh my goodness.

[Christine Ligorio Chavkin]

These tech workers that are unemployed now are starting companies. Right? This is a little bit of a bright lining to the bad news of the past couple years. We're seeing a real boom in startup activity. A lot of tech startups, they're now self identifying as founders after getting booted.

[Diana Ransom]

I love the silver lining to that particular negative experience. When we come back, Inc. Staff writer Sarah lynch tells us us all about this past year's DEI backlash. But first, a quick break.

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[Diana Ransom]

Speaking of negative experiences, Sarah, you've done a lot of reporting on the basically the backlash of De and I programming. Can you kick us off, tell us what's happened this year?

[Tim Creno]

Yes. So I think to talk about this year we have to briefly go back to 2023. That's when in June the Supreme Court ruled on affirmative action. It was overturned. That unleashed basically a flurry of lawsuits related to dei, but not just at colleges and universities, at companies as well. One of those being the Fearless Fund, one of those being hello, Alice. Both cases that we have covered throughout the year over at Inc. And then also heading into this year, basically was the escalation of those lawsuits. Whether or not they settled, whether or not they continued, whether or not there was a ruling like there. We've continued to watch with both of those cases and many others. We also have very public attacks from folks like Robbie Starbuck leveraged against big companies like Lowe, Lowe's, Harley Davidson that have caused a lot of attention and worry among other companies too. Then you have the election. Then Trump's win puts even more fuel on the fire. That's a direct quote from David Glasgow, who I spoke with. He's at the NYU School of Law at the Meltzer center there, says that that just caused even more anti DEI action and empowerment really in that movement. So now here we are at the end of 2024 and we're already starting to see this changing environment play out at companies. Dei.

[Diana Ransom]

Yeah, they're not talking about it.

[Tim Creno]

They're not talking about it. They're not hiring for it. DEI related job postings have gone down. Yeah, that's according to multiple reports over the year. Companies are changing their language around dei. That's been really interesting to see play out. Taking out words like diversity.

[Diana Ransom]

Universities are doing it too.

[Tim Creno]

The Society for Human Resource Management took the word equity out of their DEI acronym. Right. So that's a huge indication of where this could be going into 2025.

[Christine Ligorio Chavkin]

Are any of these companies doing that because it just should be part of how we think and just is or is it all backlash, do you think?

[Tim Creno]

It seems to be backlash related, Cristine, because they're not changing too much about their actual programs according to A couple of the experts that I've spoken with, this just seems to be something that they hope will placate many of these anti DEI activists so that they're not the next one to get a lawsuit. Which whether or not that will play out would be interesting to see. But that seems to be their first line of defense. But even workers are becoming less enthusiastic about dei that came out in a recent Pew Research center survey. So it's going to be really interesting to see where this goes from here. But this doesn't mean that companies have given up on DEI in general.

[Diana Ransom]

I think that we've been reporting too about a couple of instances where companies actually face litigation and are coming back stronger than ever. So it is exciting. And I am, I'm kind of like on the seat of my, on the edge of my seat, you know, trying to figure out like what, like trying to see how it goes next, you know, like, are they gonna get embroiled in another lawsuit and can they really be this confident heading into a Trump administration?

[Tim Creno]

Right. Like a lot are just. I spoke to one expert who described as going underground. They're just waiting out to see if this kind of energy around the anti DEI movement will just kind of fizzle and then they can start coming forward with, with their programs again.

[Diana Ransom]

Yeah. You've been doing a lot of reporting on the Fearless Fund in particular, and that's a nonprofit example of, or an example of a nonprofit being implicated in a legal spat with De and I issues. Where are they now? What's happening?

[Tim Creno]

Yes. So I recently spoke with the co founder of the Fearless Fund and Foundation, Arian Simone. And what's interesting is they settled their lawsuit in September, which from the outside might look like a loss. They are framing it as really a victory because this means that their DEI case did not go to the Supreme Court, did not create case law that was going to limit race based funding moving forward for sure. But now they have to decide how they're going to continue to operate. They have a number of portfolio companies, but even when I was speaking with Arian, she said, we're not starting another fund anytime soon. We are going to be waiting to see how this all plays out, supporting our portfolio companies. Absolutely. But right now she just said there's so much political activity and also a pullback in DEI commitments that's making her hesitant in moving forward with certain plans.

[Diana Ransom]

Yeah. Meanwhile, if you look at like the investment environment, you'll still see ESG related companies doing really well in terms of being good attraction mechanisms for investors. Like the investor money still is still there for these kinds of, you know, environmentally friendly businesses and socially responsible businesses. Yet it's still a hard time if you're like actually committed to diversity.

[Tim Creno]

Yes, and it's interesting to see how this will all go, how the lawsuits will go. But also you were talking about Gen Z earlier. Gen Z is very committed to diversity. That's come up in multiple surveys as well. So if these new younger workers are coming into companies with these values, it seems like there'd be no choice but to address them in some way.

[Christine Ligorio Chavkin]

Do you think we'll see a new wave of it? I mean like, will it reform in some way?

[Tim Creno]

When I was talking to Arian Simone, she actually did mention that she believes it's a pendulum swing on dei. It goes back and forth, back and forth. Right now there's a lot of worries about this, but she expects that time again from now there'll be reignited excitement.

[Sarah Lynch]

I also wonder, just like, do you know what is the backlash about? Are there any specific objections or is there something about the implementation of DEI or the practice of it that's not clicking with people or causing. Because you said, you know, workers are also unhappy with it.

[Tim Creno]

Right. So I mentioned David Glasgow before. He's at the Meltzer Center. They created a tracker basically looking at over 100 DEI cases. The most common are for these targeted programs that are supporting, let's say in the case of the Fearless Fund, black owned businesses. Right. Specific groups of either employees or founders for a fund. And basically these opponents are saying you need to open this up for everyone. It can be under resourced, it can be underprivileged. But to limit these kinds of programs is they believe, illegal.

[Diana Ransom]

Strictly based on race.

[Tim Creno]

Exactly. So I'm interested to see if, and I believe we will see many of these companies not abandon these programs, but open up the qualifications for many of them to either avoid backlash or maybe just because they feel that there should be casting a wider net.

[Diana Ransom]

Is it just related to race or is it more gender focused? Is it any kind of seemingly unmeritocracy, unmeritocratic programming?

[Tim Creno]

That's interesting question. The cases I've seen, the cases that have certainly been getting most attention, I've been most closely watched seem to be definitely related to race.

[Diana Ransom]

I was wondering if like the gender would be the next shoe to fall.

[Tim Creno]

Right.

[Sarah Lynch]

I also wonder if, because I've seen a lot of this too where I think there's the promise of dei, which is we're going to create more equitable hiring and then people find out, oh, there's actually laws around. There's a lot of laws around hiring based on, like, race or ethnicity or protected characteristics. It is a challenge to hire a diverse workforce, and one that I think HR departments are not equipped to handle or are slow to adapt to or hiring managers in general. And then I think there's also the realization it goes back to the whole Gen Z manager burnout thing of, like, you have to support people once you hire them or they're not successful. And then unfortunately, you know, if it's a person who, you know, does identify as of a different race, it's sort of like they become sort of emblematic of the failed promise of it, which is totally unfair and not scientific. But I think there's a perception. It might just be part of the perception problem. Right. Is sort of throwing the baby out with the bathwater.

[Diana Ransom]

Yeah, that's really fascinating.

[Sarah Lynch]

That's just my whiteboard. You know, it makes perfect sense.

[Tim Creno]

And in dei, the eye for inclusion is why so many companies emphasize that once we have a diverse workforce, how do we keep it?

[Diana Ransom]

You have to nurture this. So what are we excited about? What are we looking forward to? Obviously, this new year is going to have some good stuff. It's going to have some wild stuff and uncertain stuff. What's on your radar, Tim?

[Sarah Lynch]

Oh, God.

[Christine Ligorio Chavkin]

That doesn't sound like overly optimistic.

[Sarah Lynch]

Well, I mean, where to begin? I think crypto obviously is having.

[Diana Ransom]

Oh, yeah, the crypto.

[Sarah Lynch]

A new moment. Yeah, People are excited about it again. Bitcoin's up. Doge is up. I foolishly.

[Diana Ransom]

Oh, you're like the actual dogecoin crypto coin.

[Sarah Lynch]

The only reason I know I bring that up is because I did. And experimentally five years ago, I bought, I think, $50 in Dogecoin. It immediately devalued. So it's just been sitting in my Robinhood account for years at negative 50. Then I noticed one day it skyrocketed back up to 50. I was like, well, I better get rid of it now before it crashes again. But here's the thing. Crypto is not crashing yet. It's going back up.

[Diana Ransom]

Yeah, yeah. Bitcoin's like over 100,000 now.

[Christine Ligorio Chavkin]

Talk to your accountant about this, Tim.

[Sarah Lynch]

What she doesn't know can't hurt.

[Christine Ligorio Chavkin]

I mean, I do think like that is it's going to be in the news over and over and over again, whether it's new folks in Trump administration. The administration.

[Diana Ransom]

Yeah. We have. We have Paul Atkins running sec, and we have David Sachs, who's going to be the crypto and AI czar. David Sachs is a very, very well.

[Christine Ligorio Chavkin]

Known venture capitalist and serial entrepreneur. Right.

[Diana Ransom]

AI enthusiast.

[Christine Ligorio Chavkin]

Yeah. Interesting. So I mean, I would say like regulations to watch, but I don't know that they'll be putting in regulations. So.

[Diana Ransom]

Yeah. When you said doge earlier I thought you were talking about the department of like, what is it?

[Christine Ligorio Chavkin]

Government efficiency.

[Diana Ransom]

Government efficiency.

[Christine Ligorio Chavkin]

I don't mean to say that with the tone, but I mean I was kind of trying to put in air quotes.

[Diana Ransom]

I heard the tone.

[Christine Ligorio Chavkin]

No, no. I mean, I don't know. I mean, I feel like it's going to be a lot. Folks need to be kind of tread carefully in the business world like in these realms, Right?

[Diana Ransom]

Yeah, absolutely. It will be a lot. And we will be very busy here at Inc. Yeah, for sure.

[Christine Ligorio Chavkin]

Let's hear everyone's takes on tariffs. What's going to happen?

[Diana Ransom]

Okay. The promise is that we're expecting broad based tariff between 10 and 20% across the board on imports and then plus 60% on Chinese made goods. Wow.

[Christine Ligorio Chavkin]

Yeah.

[Diana Ransom]

So that's going to rock a lot of businesses, especially in our orbit. But according to the stories that we've been writing and the companies that we've been talking to, if you have products that are made in America, you're happy right now that's the flip of this coin is that some businesses will do.

[Sarah Lynch]

Pretty well and there's certain industries that we've noted will be affected more than others. Agriculture, retail, manufacturing. I don't know if you've seen the news today, but toy makers are freaking out and companies in general, if they're importing a lot of stuff, they are rushing right now to import things.

[Diana Ransom]

People are stocking up.

[Stephen Marsh]

Exactly.

[Sarah Lynch]

So I predict maybe even a warehouse boom could happen.

[Diana Ransom]

Oh, that's fascinating.

[Sarah Lynch]

So get your warehouse and import your toys now. I don't think tariffs are as a whole good. I think it's a purple state issue with a lot of nuances that people do not understand because those costs are gonna be passed down to the consumers. And a lot of the tariffs Trump put in place in his last administration, Biden's actually upheld and even added onto.

[Diana Ransom]

And they've been revenue drivers for the country.

[Sarah Lynch]

Yep. But here's the thing. A lot of financial experts are, they're very worried about this new set of promised tariffs and they don't really see these ones as having the same beneficial effect.

[Diana Ransom]

Well, especially if they're broad based. And the idea is that other countries might pursue their own tariffs against the United States. Here's an interesting fact. Small companies, about 1% of small companies actually engage in exporting traditionally.

[Christine Ligorio Chavkin]

Huh.

[Diana Ransom]

So this is probably a crisis for big businesses if we're thinking about reverse tariffs or retribution.

[Sarah Lynch]

And when you think about that in the risk landscape, it sounds like a good opportunity for small businesses to help solve some of those problems. Like I mentioned warehouses. But if you are an importer or an exporter, a lot of companies are finding a workaround and they'll import basically to a country that doesn't have tariffs with the United States and then import again from that country. So. So it's a little more costly, but it's less than paying the tariff. So if you're someone, if you're shipping.

[Diana Ransom]

And logistics, what a nightmare for climate change. Let's move it to Mexico and then move it to the United States.

[Sarah Lynch]

Exactly. Which is why I say it's kind of like a purple issue, because the promise of tariffs is good for our economy, good for workers, good for jobs, better for the environment. But I think we can sort of see how. To your point, it won't have the effect. No one right now can say exactly what will happen. And it will probably not have as many beneficial effects as Trump thinks it will or is, you know.

[Diana Ransom]

Right. Yeah, he sort of sees it as this. It's a revenue driver for the country. He thinks that American made and generated products and the companies that produce them will do better. It'll be good for American innovation. That's interesting. Will it be good for American innovation?

[Sarah Lynch]

Will it be good for American innovation? I think. Let me think about that. I think it will be good for American innovation. I think the American entrepreneur is one that treats business and entrepreneurship as a way to solve problems and in many cases the problems that institutions or governments can't or won't solve. So I think for the savvy entrepreneur, pay attention to where the problems are. That comes out of this year of chaos or four years of chaos or. And keeperinc.com for ways to.

[Diana Ransom]

Excellent evergreen advice there. And Sarah, how about you? What are you watching?

[Tim Creno]

Yeah, so I think it's kind of worth noting that entrepreneurs seem to be feeling really optimistic right now. That came out of my reporting this week. The NFIB's most recent survey, the first survey post election, showed a huge breakthrough in optimism for small businesses.

[Diana Ransom]

I mean, small business owners are notoriously optimistic though.

[Tim Creno]

Yeah, indeed. But for the past almost three years, their optimism levels have been below the 50 year average. And this is the first time that this has broken through And I think that that's really notable heading into next year. And so I think what I'm heartened about is if they're feeling so optimistic, that could lead to really interesting innovations and investments in their company heading into next year. So I think we could be coming up on a really interesting.

[Diana Ransom]

Oh, we're definitely coming up on an interesting environment, for sure. How about New Year's resolutions? Do we have New Year's resolutions?

[Sarah Lynch]

New Year's resolution.

[Diana Ransom]

Okay, so I'm gonna eat better. Like, I think I'm gonna eat less bread, less cereal.

[Christine Ligorio Chavkin]

More vegetables.

[Diana Ransom]

More vegetables. Salads.

[Christine Ligorio Chavkin]

Sure.

[Diana Ransom]

I'm doing it. Cause I think I have like skin issues related to eating bread. Okay.

[Christine Ligorio Chavkin]

Are you gonna, like.

[Diana Ransom]

I have diagnosed myself.

[Sarah Lynch]

Okay.

[Christine Ligorio Chavkin]

Are you gonna do the RFK thing? Like avoid seed oils and lime, food.

[Diana Ransom]

Coloring and fluoride too. The seed oil bandwagon. Doing it.

[Christine Ligorio Chavkin]

I think part of my resolution is that I'm gonna get my kids to eat healthier.

[Diana Ransom]

Oh. I mean, that's always my struggle every day.

[Christine Ligorio Chavkin]

But I think I'm gonna, like, tweak my running goals a little, adjust it a little bit, lift more weights.

[Diana Ransom]

Oh, my goodness.

[Christine Ligorio Chavkin]

Yeah.

[Diana Ransom]

You're gonna be buff.

[Christine Ligorio Chavkin]

Well, I mean, hopefully I'll just be less frail. I don't know. That's what I'm going for. Sarah, what about you?

[Tim Creno]

I'd like to get to 20 books on Goodreads. I think this year I'm at like 14, 15. The year before I was at 17. That was a pretty great year for me. Haven't cracked 20 and would love to.

[Christine Ligorio Chavkin]

Do you do audiobooks or just audiobooks?

[Tim Creno]

I'm a big audible. I need to multitask.

[Diana Ransom]

Do you consider yourself having read the book if you listen to one?

[Tim Creno]

I do because I don't tell people. Oh, I listened to that. I just say I read it. And then if they have follow up questions, I can tell them. But it's reading.

[Sarah Lynch]

I mean, if you.

[Tim Creno]

I'm a defender of that.

[Diana Ransom]

So you call it reading?

[Sarah Lynch]

I call it reading if you're absorbing the information.

[Tim Creno]

Right, Exactly.

[Sarah Lynch]

I get talked to all day, so I can't do audiobooks. But I think, yeah, you know, I need to get back on my running goal. I haven't done a half marathon in a long time. I'd like to do one in the spring.

[Diana Ransom]

Well, the fact you've done one is impressive.

[Sarah Lynch]

Like seven years ago. I mean, it counts. It's been a while, so, yeah, I'd like to start training for that. You can all hold me accountable. Brooklyn half May20,25.

[Christine Ligorio Chavkin]

Absolutely. Maybe I'll sign up too. There we go.

[Sarah Lynch]

Let's do it.

[Christine Ligorio Chavkin]

All right.

[Sarah Lynch]

And then, yeah, I think also I went for a run this morning much earlier than I usually do in prosp in Brooklyn, and it was really beautiful. And I just forgot, like, morning people are on a whole other level. They're living a whole other life.

[Diana Ransom]

We are wonderful.

[Sarah Lynch]

I mean, I walked past the door.

[Christine Ligorio Chavkin]

You are wonderful, but you are different.

[Diana Ransom]

We are unique.

[Sarah Lynch]

But it looked fun. I mean, people. There's dogs off leash, there's people meditating, looking at swans. I'm like, this is where it's at. These people are onto something.

[Christine Ligorio Chavkin]

Wait, so is your resolution to become a morning person?

[Sarah Lynch]

I've done it before and I will do it again.

[Christine Ligorio Chavkin]

All right. I love this.

[Sarah Lynch]

You put it here first.

[Christine Ligorio Chavkin]

I love this.

[Diana Ransom]

Happy cheers to you. And good luck with your New Year's resolutions, everyone.

[Sarah Lynch]

Thank you.

[Diana Ransom]

Thanks for joining us.

[Sarah Lynch]

Thanks for having us.

[Christine Ligorio Chavkin]

That's all. For this episode of from the Ground.

[Diana Ransom]

Up, be sure to subscribe on Apple Podcasts, Spotify, or your podcast platform of choice. Also, if you like this episode or have suggestions of what topics you'd like to hear about, leave us a review on Apple, Apple Podcasts or reach out to us on Inc. S social channels on LinkedIn, Bluesky, or Instagram.

[Christine Ligorio Chavkin]

From the Ground up is produced by Mariam Kiporowice and Avery Miles. Editing by Blake Odom Mix and sound design by Nicholas Torres. Our executive producer is Josh Christensen. Our next season begins in February. We'll be featuring some really remarkable women founders to start our new season of from the Ground Up. So we'll see you next next year. Oh, by the way, update on the world. As a reward after this appointment, I bought Solly a corn dog on the street in lower Manhattan.

[Diana Ransom]

Is it gluten free?

[Christine Ligorio Chavkin]

No, but it did cost $15. Are you from a street vendor? And I was like, what the fuck?

[Diana Ransom]

No.

[Christine Ligorio Chavkin]

Yeah.

[Diana Ransom]

That is ridiculous.

[Stephen Marsh]

I know.

[Christine Ligorio Chavkin]

It's just. Don't even. I mean, I'm just. As a word of warning, what in the world? I was like, really? Yeah. I was really, like, rushed. And I was like, here, get this. And I opened my wallet, there's $1. I was like, fuck. I was like, sir, do you take credit cards? Can I venmo you? He's like, yeah, credit card, fine. Plus this machine. I was like, you know what? Since we're doing that, let me get this lemonade for him too. So the corn dog plus the lemonade, $15. And maybe I got charged up. Cause it was a credit card situation. It could have been a little. Isn't that supposed to be like $3?

[Diana Ransom]

Yeah. So you still bought it? Cause you had to.

[Christine Ligorio Chavkin]

I was invested at that point. And we were in such a hurry.

[Diana Ransom]

Because you can't say no at that point. Right.

[Christine Ligorio Chavkin]

He's already got the corn dog in his hands with like ketchup on it, like.

[Diana Ransom]

Yeah, yeah.

[Christine Ligorio Chavkin]

And like it was. Of the things he wanted, that was probably the healthiest option that was like, available, you know, he would have bought some.

[Diana Ransom]

He didn't want to get the churros.

[Christine Ligorio Chavkin]

Yeah, right. He would have wanted the subway churros.

[Glenfiddich Ad]

Hi, listeners. I'm Blake Odom, producer of from the ground Up. Today we have a special segment brought to you by inc. In collaboration with our partners at Glen Fiddick's single malt scotch whiskey. This year at the Inc. 5000 gala, Glen Fittick presented the inaugural legacy award to Stephen Marsh, founder of Smarch. This award recognizes a trailblazer, an individual who has graced the Inc. 5000 list multiple times. Embodying the spirit of innovation, boldness, and a relentless drive to defy the ordinary. Much like Glenfiddich, a brand that has pushed the boundaries of excellence throughout its 130 year history to become the world's most awarded single malt scotch whiskey, Stephen Marsh exemplifies the courage and brilliance it takes to redefine industry and elevate the game. Inc. Editor in chief Mike Hoffman spoke with Stephen Marsh about his remarkable journey, the legacy he has built, and the honor of being the first recipient of this award presented by Glenn Fittick. Here's that captivating conversation. Enjoy and be inspired.

[I]

Hi, I'm Mike Hoffman, editor in chief of inc. And I'm delighted to be here today with Steve Marsh, the founder of Smarsh, a multi time Inc. 5000 honoree and the recipient of the inaugural Inc. 5000 leg award presented by Glenn Fittick. Steve, thanks so much for joining me.

[Stephen Marsh]

Thanks for having me. I'm excited to be here. Mike.

[I]

Yeah, this is great. Let me get this straight. You've been on the Inc. 5000 list 17 times so far?

[Stephen Marsh]

I think that's correct. I think 17 times.

[I]

We double checked it. You've been on the list 17 times. How many years has the company been in business?

[Stephen Marsh]

Since 2001, so about 23.

[I]

I guess you've been on the list more than you've not been on the list in the 23 years of your corporate life.

[Stephen Marsh]

I think once we finally made the revenue threshold, we we made the list and have been on it since.

[I]

Well, congratulations. It's amazing to make the Inc 5000. It's amazing to make the Inc. 5000 a couple of times and to make it 17 times puts you in really rare error. Only a few companies have made it more than 15 times. So congratulations. Now, you started the company in 2001, is that right?

[Stephen Marsh]

That's right.

[I]

And your name is Steve Marsh and the name of the company is Smarsh. Do I have it right that your original email address had something to do with the ultimate name of the company?

[Stephen Marsh]

I incorporated to do consulting work, never thinking that, that the business name would see the light of day. It was just incorporated as Smarsh Inc. Because Marsh was taken by the large insurance company, so we couldn't use that. My friends at the time that I, you know, my coworkers had all called me Smarsh because that was like my email handle. So I said, hey, let's just go with that. The domain name was available and many years later, with a larger marketing department and more resources available to us, more domain names available to us, we still decided to keep the name Smarsh. But that should serve as proof that I never had intention of building this business into anything.

[I]

So who was your first client?

[Stephen Marsh]

My first client was a small brokerage out of Boston, Massachusetts and a friend of mine had worked there and had told me about this need to archive communications for regulatory compliance. And I knew virtually nothing. I mean I knew absolutely nothing about that. I knew that I needed to make some money to pay rent and that I had some technology skills. So I set out to actually help them implement a solution that I thought I would source from another vendor and quickly found that there weren't other vendors out there doing this, at least to service the small and mid sized companies. The business at that point pivoted from being a consulting business to being the archiving and communications intelligence business that it's become today.

[I]

When you started on the hockey stick like trajectory of growth, what was the sort of first moment, if you remember, where you kind of knew, oh, this is like not just a consulting business, this is a real business, a technology business, and actually it's a fast growth technology business.

[Stephen Marsh]

One moment that comes to mind is we had a large competitor in an adjacent space. They weren't archiving the way we were, they did data backup or something and they made an offer to buy the company, really in our first year of effort in trying to sell the archiving service. And it was hard as a founder to turn Down. I think it was like a million dollars, but it was complicated, but we passed on it. That was a great decision. But that really validated for me that we had built something that was at least perceived to be of value to someone else. And of course, making the Inc. 5000 list for the first time after applying earlier that year and not being able to apply the year prior to that because we didn't meet the. We weren't big enough. We didn't meet the revenue thresholds. Anyway, when we made that list, that was fantastic validation for all the hard work that we had done. It gave us a sense of credibility when we would go out to our customers. By being able to put the Inc. 5000 recipient logo on our emails and on our website, that actually helped us grow to the next level.

[I]

Beyond that, you at some point took growth capital, private equity, is that right?

[Stephen Marsh]

We did. It wasn't until 2007. First investors were minority investors in 2007. Ironically, the point at which they became interested was a point at which we no longer needed money. I think many founders probably go through this. When you're trying to raise money, it's a lot harder than when you don't need it. When you don't need it, everybody seems to come out of the woodwork. Then they try to convince you why you should take money. I think that was a key moment where we realized we needed to significantly upgrade our technology infrastructure if we wanted to win bigger and bigger customers. We were making incremental changes every year. You know, the rip and replace that you hear technology companies go through, where every six months or so we were taking out old equipment, replacing it with new, bigger and better equipment. And that really just wasn't scalable. It was becoming a distraction to have to keep going through those projects every six months or so. By raising capital, we were able to get off that. That hamster wheel, and we were also able to start making some acquisitions. Became a part of life from that moment forward.

[I]

What did you learn about business ownership and business leadership? Going through the process of acquisitions, you.

[Stephen Marsh]

Know, we gained access to people who had operated at the level beyond where we were, which is a pattern, you know, we'll see occur over and over in our business. But there were smarter people who had more experience in a variety of areas, and they presented some of the reasons why we would want to do some acquisitions. They also educated me and the rest of my team on how to do them. But it taught me that there are a variety of ways to help grow the business. You probably don't want to grow your business just doing acquisitions, although that does create value for a lot of companies. But for us, it was a combination of organic growth through innovation and product development and serving our customers with different products and services and making some of these acquisitions to bring in new technology, to bring in additional competitors, to bring in more expertise than we otherwise would possess. And today that trend continues. We're trying to bring in more AI expertise. For example, we might look to do an acquisition there.

[I]

Can I ask, where are you guys at revenue now?

[Stephen Marsh]

We are about 500 million.

[I]

And what's the fastest growth part of the company right now?

[Stephen Marsh]

There's a lot of focus on leveraging the data that we have stored on behalf of our customers. If you think about the initial use, case for those that don't know is that we help customers by storing their electronic communication so that they can meet regulatory requirements. You have to have this stuff. You have to be able to produce it. That's kind of the baseline service. But what we've found is that over the years, you start to amass more and more really valuable information on behalf of our customers. So we have years and years worth of emails, text messages, zoom calls, you know, whatever it may be. In a world where artificial intelligence is taking over and people are trying to find ways to harness the value of data, we're sitting on what we think is one of the biggest gold mines out there in terms of data. It's employee communications that were captured initially for a different reason, but now can be turned into sales opportunities, customer service opportunities, new product ideas. You know, I think we're seeing a lot of growth.

[I]

So an archive can become a large language model.

[Stephen Marsh]

Yeah.

[I]

So this is obviously the Inc. 5000 Legacy Award brought to you by Clinton Fiddick. As you think about the legacy of the company and your legacy as a founder, what do you still hope for? What is your idea of what the legacy you want to leave is?

[Stephen Marsh]

We have a very unique culture, I think one that reflects what I wanted to create many, many years ago. I want it to be an organization that, you know, hopefully my kids one day look back on and say, wow, you know, dad must have built something pretty interesting here. It's still around. It's still relevant. Our customers still find value in what we're doing. I just want to see it reach its maximum potential. Not every company, even, you know, not every company that that is started or that I'm involved in or that I invest in has the same opportunity to persist through time. Some companies are better as a short term product that maybe gets sold to someone else and they integrate the technology. Some technologies have a shorter lifespan where maybe it's two to three years and then you have to move on. This is a business that I believe truly has the opportunity to exist for many, many years and to be relevant by just listening to customers and adapting and finding or addressing use cases that we found many years ago.

[I]

Steve Marsh, the founder of Smarsh, a half billion dollar company founded in a Brook apartment that's been on the Inc. 5000 list 17 times. Thanks so much for joining us today.

[Stephen Marsh]

Thanks for having me.

[I]

And before I let you go, we have these glasses of Glenn Fiddick here. You are the inaugural recipient of the Inc. 5000 Legacy Award presented by Glenn Fittick. So let's cheers to your success.

[Stephen Marsh]

Cheers.

[Glenfiddich Ad]

Congratulations again to Stephen Marsh. And I couldn't end this episode without getting a little taste of Glenfiddich myself. And since I got a bottle right here. Cheers to you listeners with Glen Fiddick, the world's most awarded single malt Scotch whiskey. Drink responsibly. Glenfiddich single malt Scotch Whiskey is copyrighted 2024 and imported by William Grant & Sons, Inc. New York, NY.

[Stephen Marsh]

Panoply.