Michael Zalle on Locally Grown Podcast
02/03/2021
CEO Michael Zalle recently made a guest appearance on the Locally Grown podcast. Michael and Regina chat about Michael’s rise to entrepreneurship, YellowBird, and how every business needs a safety plan. Listen or read on below!
00:00
Welcome to the show, Michael.
00:02
Thank you for having me.
00:04
And, Michael, I’d like to start from you. Because I’d like to know a little bit more about you about your background. I know it’s in tech, what kind of tech? Tell me more.
00:14
I started in tech, when I was about 16 years old. I was a doorman at a movie theater. And one of my regulars who came in every Friday with his wife got to know me. And so he asked me, you know, do you know anything about computers? And I said, Yes. Which I knew very little. This was 1991. Early, very early. And he asked if I was interested in selling computers. I said, Yeah, I’d love to. And so I started with them. He was a distributor of Macintosh and PC, for businesses. And I was around 15. And I was pretty successful doing it. I was in Orange County, California. in Anaheim, actually, is where the store was. Turned out. I was pretty good at it even at that age. And I did that for a few years and was kind of my first foray into, you know, knowing nothing about business, but knowing I liked working with people, and I could figure out what they needed and asking good questions, I guess.
01:37
And to sell something, you really need to know the product. Right? So did you take time to learn about these? These computers?
01:44
Yeah, I did. And I’m a quick study. I think that’s one of my, one of my superpowers, I guess I I gather information quickly, on what’s really the root, most important thing about when I’m selling, offering, providing whatever that is,
02:01
it’s really interesting. So and how does it like, how does it evolve into? I know, you’ve been creating concepts, you’ve been solving problems with the concepts and companies, you’ve been seeing a lot of success in the past? So tell me like how, okay, you’re selling computers? And then how did you get to the point when you’re creating some sort of concept?
02:20
I’ve always been entrepreneurial. I guess you can kind of, I think a lot of salespeople, and people in sales and business development and relationship builders are entrepreneurial, or creative. I went from computers to fiber optics, so beginning of the internet, you know, and it was not that I went there, I was pulled in there by somebody who offered me, you know, another opportunity. And after college I was selling web programming, internet programming, HTML web pages, when the biggest argument against it was, we think this is a fad, we don’t think it’s going to actually work out, which was funny, looking back now. And I was trying to sell a company, or at least present to a company the opportunity to help source their web development, because it was called HLC internet, which became epic networks, which became a very large organization. But I met the CEO. And he said, you’re really good. I don’t need your services. We have 25 web developers back there, but I want you selling for me. And so at the time, he offered me, I don’t know, 5 or $10,000 more, which was huge at the time to go and sell for him and went through that cycle with him. That was a seven year straight up. Deal, raised $300 million and was in the boardroom at a very young age. I didn’t raise that money, I was part of the team, I was fortunate to be very, very successful in business development, building these relationships. And so I started getting pulled into the boardroom at 18 and 19 years old, saying, what does your pipeline look like? Or where should we take the business? And so I got a little bit of a glimpse of what it meant to build a business from the top. And so every time I had an entrepreneurial opportunity from then on out, I dipped my toe in it, some were catastrophes, some did very well, but it wasn’t easy. It was during a time where it was easier to raise money than it was to go to the business. We raised a lot of money. We burned through a lot of money. I often say that I worked in probably four or five companies in that one company because I stayed in the same chair doing the same job, focusing on the same goals, where we hired hundreds of people that didn’t make it that just flowed through Me, and it was telling about how expensive it is to, to build something without really. I mean, throwing bodies at something is the most ridiculous thing you could? Yeah, yeah.
05:13
How was it to see that turnover rate like I can only imagine?
05:17
It prevents you from building long term relationships, and you isolate. Which is a dangerous thing. And really, one of the reasons I left is because you end up not enjoying the community that you’re part of. I mean, when you build a team, you’re building a team, and hopefully you’re all enjoying what you’re doing. And you’re, you’re on that same mission, and you’re trying to accomplish something that’s meaningful, and, you’re helping each other out. And the reality is that people wouldn’t make it 3 or 4-5 days it would be like you’re in, we’re gonna pay you a great salary for a very short period of time. But if we don’t see a glimmer of spark of hope you’re out.
05:58
Yeah, time and new technology. It’s always something that disrupts the old and is always crazy, like we know from the history and from what’s happening even now. Michael, I have a question for you. Is that a goal that brought you to our state? How’d you end up in Arizona?
06:13
So my wife’s from here she went to Xavier down the road here. But her family’s here. The main reason I came here was my mother in law has Alzheimer’s. And so she’s still around, and she’s doing fine. She’s happy, but it was time to bring the grandkids out and make sure they had some quality time with grandma while she was still good.
06:36
And that was back in?
06:37
Two years. Three years ago, three years ago. Yeah, relatively.
06:42
Yeah.
06:44
This is a wonderful community. I’m probably the biggest poster child for Phoenix, Metro and Arizona, the amount of engagement that I’ve received and giving invites in Hey, Mike, you’re new to the community? Why don’t you come up to this social mix? When we could go socialize? Remember those times? Yeah. And hey, what do you do? You know, I need to introduce you to this person, this community is just a lot of real generous giving, that I never felt in Southern California. And I don’t really know why. But I never really felt that and I was there for 42 years. I have a better network here in three short years than I do in California, which is amazing, because I was a third generation, Southern Californian.
07:32
Yeah, thank you for this perspective. I feel more comfortable writing business here now. So Michael, YellowBird. Yes. Switch to YellowBird. What was the problem that the company is about to select? What was the thinking behind the concept, how it all came to be into something that we call now YellowBird?
07:52
Water was originally because I’m not a I’m not that creative person. It was originally zipEHS, which is zip for fast and EHS environmental health and safety. And finishing off the story from earlier, after fiber optics, I got into satellite communications. And I’ve been in satellite communications for about 10-12 years. And the main driver in satellite communications is environments that were temporary workforces have high risk environments. So oil and gas, mining, infrastructure builds, construction, things that you’re going to have a lot of people doing critical work for a mid duration of time, so say, anywhere from 90 days to 24 months, and then they’re going to be moving or, or shifting or changing. And so often places that don’t have infrastructure, they don’t have fiber, they don’t have cell coverage. Despite what those maps say, on your, on your at&t and Verizon maps, you get about three miles off any major highway and you’re gonna have some trouble getting connectivity, while the driver behind all of that is how do I keep my people safe? What do I do if there’s an incident? Rigs explode, people get injured throwing the call a throwing chain, which is basically they throw a chain around the pipe and they pull it to spin it. And it’s a core function of whenever you’re drilling to a very dangerous thing. You know, in the satellite world, it’s how do we make sure our base goes home safely? And are you in OSHA compliance, I got to know those laws really well. And I got to know those drivers really well. And so I get to know the people in the industry really well. One of the main issues is it’s such a nomadic industry, of environmental health and safety, that it’s hard to find people who understand your industry in your specific needs on a burst capacity. And so for for me, I was in the back of an Uber literally at 5:30 in the morning, the gentleman that was driving me was a high ranking officer from a foreign government, for military and now he’s driving an Uber at 5:30 in the morning, not for, as he said, I wasn’t doing it for the income, I was doing it because I needed something to do because I was going out of my mind. And I was thinking to myself, during 2008, my father got retired. He said, he got retired because he was in the financial world, he was at retirement age, and oh, eight was tough. And so he didn’t choose to get the golden watch. And to walk off into the sunset, what he chose to do, was we gracefully, but they were shutting down and there was a, it was a tough environment, and he was going to consult. And so I was thinking, and this gentleman reminded me of him. Okay, there are people who are 20, 30, 40 years in industry who understand the ins and outs of these things, who aren’t unemployed, but they are knowledge holders, they are professionals, they could pay no more than most people ever know. And yet, they’re driving Uber. And so, you know, I was just kind of contemplating of what I don’t like in this kind of marketplace. And, you know, whenever you’re dealing in two sided marketplaces for staff or other services, you’ve got a supply side and demand side supply being the knowledge holder, in my case, the EHS professional. And on the business side, the demand side, you’ve got any type of corporate operation that has to execute on their OSHA and compliance and risk and insurance plans. And so I’m like, Well, what if I could match those folks together? You know, it’s not going after the unemployed, it’s going after maybe even employed. And I think that, if you’re looking to just serve the unemployed, you’re going to have, you could have a very good business, you’re basically a recruiting company. You’re a staffing agency. For us, we’re trying to get the best knowledge holders, accessible to the people who need their knowledge.
12:11
How do you evaluate that knowledge? I wonder?
12:13
We have quite a deep dive we go through. I mean, the good news is that certifications and accreditations and certificates and degrees, this industry loves them. And so we have, at one point, we had over 70 different certs on our platform. Everything from things you’ve never heard of like, have you ever heard of a hazwoper? No, hazwoper as a hazardous materials certification. And so it’s for people who deal with chemicals, and in manufacturing or in laboratories, or in any environment that you need to control. Chemical management. Well, that’s a very important role. Not something you need all the time. It’s a good example. There’s a construction certification, that’s a construction safety person. And they go through a two year program. And you’re not just a general safety leader, but you are a construction safety leader. We have construction firms here in town that we’ve worked with, they’ll say we need to do construction OSHA training, or we need a supervisor at this site. Subcontractors are notorious for having requirements to have a safety person on location, but not having the budget to do it. So we’re very good at that. So the evolution from the back of that Uber to today, and this is probably the most important thing, I can tell anybody who ever wanted to start a business, I started pondering it, I started thinking about it. And I thought, okay, who are three or four people I could talk to? That will tell me this is a horrible idea. Because you don’t want Yes, men around you. You really don’t. You want people to tell you why it won’t work. And I wanted one person in particular. Ironically, he never invested. I call them all spare the name but nice today. I know you refer to yourself as the Grim Reaper, you know, because everybody wants him to invest in things. You know, he was managing billions of dollars and assets for a family office. And until I always laugh, I’m like, Okay, what? I’d love to get together with you, I’ll buy you lunch. I want you to tell me why this won’t work. And as we started talking, he’s like, well, what? Is it really that big of a market and like, it’s a big market? He goes, How big? I have no idea, but it’s a big market. So I had to go research that. And he’s asking really good questions. Yeah. And I’m like, I haven’t heard you say this isn’t going to work. And I think you got something here. He said, but you might be too early for me.
14:49
How long have you guys been in business?
14:53
Yeah, so I incorporated the company in August of 2019. Fairly new company. Oh, yeah. We opened revenue in January of 20. Just in time for a national global pandemic, I’ll get to that. Because nothing says start a company like a global pandemic does. And then we were very fortunate we grew Expo exponentially. Our first month in revenue was over 5000 bucks, and we ended up just under half a million for year one in revenue, which for a startup is remarkable, almost unheard of. Our core numbers and most important numbers is we have about 2000 professionals that are top of funnel. And we have about 350-360 that are Match Ready, as we call them. So these are folks who have gone through our multi step process. We validated their certs, we did background checks, we interviewed them, they have been on boarded and now they’re match ready. So these are folks that right now, if somebody came to us in Phoenix and said, I want somebody who’s a construction related person who has not residential construction, but commercial construction of it, I’ll be very specific and say, a mining facility, I probably have the person because we go into that level of depth. That’s our goal.
16:19
A quick reminder, we’re speaking with Michael Zalle, the CEO of YellowBird. It’s an Arizona based startup where health and safety professionals are connected with businesses on demand. Here is a statement that I got from I think your website while doing the research YellowBird says it ensures the deep roster of national wide professionals are interviewed, background checked, insured and certified just what you just said, right. That sounds to me like a lot of work. But my point is here. Like I’m writing a podcast production business, like I have never, I don’t remember being in need of an EHS professional. Does that mean you guys work with specific industries? I mean, I was thinking construction probably is a big roller.
17:05
So there’s actually a really interesting question. So looking at this studio that we’re sitting in right now, you would require now you haven’t done it. I hope maybe your landlord has been an industrial hygienist at some point to make sure that you are in COVID compliance, which means do you have sanitation centers? And in here, what is your cleaning regiment like? Most importantly, what is the air transfer look like in the HVAC systems? So if you have a proper HEPA filter, it’s great. But the most important thing is how often that back cycled through air. And so there is a CDC recommendation for that cycling through air, folks are like, Oh, yeah, well, you know, if you’re in a mine, or you’re throwing, you know, chain, oil rig, of course, safety, but you know, I’m a Podcast Producer or I run an insurance company or I’m a medical facilities, not, it’s not something I need. Reality is if you have more than seven employees, really, if you have any employees, but by law, if you have more than seven employees, you need to have a safety guideline and training handbook. And most people say give it to their HR manager and say, Hey, create a safety handbook. And they’re not trained to do that.
18:27
Yeah, and I’m sure you didn’t think about or probably didn’t plan on this when you were incorporating that this whole pandemic will erupt. And but now, I think we approach these safety measures very, very differently from one year ago. Oh, absolutely. Like a whole. So that was one of my questions, too. During COVID, some of the businesses slowed down, some of the businesses didn’t survive, right. Some of the businesses, they’re doing great. How was it for you, Michael, for YellowBird?
18:54
We’re very fortunate, we did well. And we did well, because we were getting phone calls from people saying, I’ll give you an example. We had an opportunity for an HBCU in Louisiana. It’s called Xavier University of Louisiana. And Xavier needed a return to school plan. And one of the things that they did is they called one of their board members, and we don’t really know how to reopen safely. And so we were able to send out industrial hygienists in a team and do sample testing do air quality testing to a full report of COVID findings, which you’re always going to get some in a campus of that size. We were I would say about 40-50% of our revenue last year came from COVID plans. That being said, the things that we anticipated being a big driver of some of our growth, didn’t you know, there were programs put on hold?
19:51
So I’m listening to you, I’m having this question in my head. So anyway, this is from coming from me as a business owner to two professionals right. And you have a roster right now. Approximately, how many businesses at from the business standpoint, like if I need someone to assess the studio, right? Like how, what is the process? Sure.
20:10
So the answer to your question is we have roughly 150 companies that have used our service at this point, the process, which is, so the old way of doing it, so I’ll get there. And then I’ll get into our process, the old way of doing it is, you’re a manager of a facility, you need to get this assessment done of the studio. You say, okay, who do I know? How do we do this? Do I go on Google? Do I call a consulting company that I know I have a friend who knows environmental laws, maybe I call them. But let’s just say you go on Google, you find a consulting company that has the right stuff on their website, they schedule with you to come out. Hopefully soon may not be soon. But it was based on your web search. And you’re going to get most consulting companies that do what we do our 123 man shops, especially if they’re local, and there’s nothing wrong with that. And, I’m and we actually have a lot of consulting firms on the platform. Our process is different. So the way our process works is a company comes on, they register, they open a statement of work, and basically says, I have a small studio, I want to have a COVID plan, because they don’t know the word assessment. They don’t know, return to work plan, but I want to have a coat on talk to somebody about COVID, basically, and they hit submit, we have an account manager that reaches out to them and says, Okay, tell me a little bit more about this, if they don’t have all the details, hopefully the full deal, but we have somebody reach out, it’s usually about a 10-15 minute conversation. And then we go and we say, we will in our database of already match ready professionals, local to that territory with experience in studios, that is in Phoenix, that understands industrial hygiene. Now, if you said I run a butcher shop, and I need to make sure that I am properly managing the runoff from the butcher shop to stay and do Food and Drug and EPA compliance. We would get somebody in food services that has food background. So for us, we take 100 plus data points that we gathered during this process here because all you’re gathering all this information that’s scary. The reality is, is that we’re gathering it for the best match. And that’s the goal that we you know, Jim Collins, famous author or speaker says, you know, you want the A players who want the right people in the right seats at the right time.
22:52
Yeah, yeah.
22:54
And for us, we need data to do that. Yeah. So that our process is very fast. Interesting. we’ve, we’ve matched people in minutes.
23:03
It doesn’t cost anything for me to open account or as a professional EHS professional to know when you’re what’s perfectly free. How are you guys making money from the service money?
23:13
We’re supposed to make money? What? So how do we make money, it’s actually a very simple concept. We work very similarly to low revenue models like Uber or Lyft, or any of the other marketplaces for services, which is a percentage of the billing. So our value proposition to the professionals to the knowledge holders is we will get you insured, we will do your background check, we will make sure that we vet the opportunities that come to you, we will present the opportunities and you need to go out and do the job. And once you do the job, we will pay you within 48 hours. On the business side, we require from their side is understanding that our terms are different than most we don’t get strung out by 60-90-120 days. So we actually have a 50% requirement. Now we change that in certain circumstances. But if we have like a master services contract with a large construction company or something like that, but in most circumstances, we will pay with a credit card, they will have somebody out within a couple of days, they will have that person do the job and then do the deliverable. We facilitate the whole thing. We get a take rate, our percentage is generally between 30 and 35%. Our professionals are very happy with that because our average billable is somewhere in the $85 range. So we’re not a minimum wage type of a play. That’s one of the things that I didn’t like about the traditional marketplace model is it was high volume, low revenue per engagement. And so ours are there better price than to have a full time staff member or to have a contractor come out or a consultant but you know the industry is not its knowledge is A knowledge worker industry. You know, somebody says, Well, I have a CSP, certified safety professional. Does anybody really know what that means? Like, what were you trained in? What can you do? And what can’t you do? Somebody came to you and said, Oh, I can do your, your assessment of COVID. In here. You say, Well, what kind of, you know, industrial hygiene background? Do you have knowing industrial hygiene? Okay, you should leave.
25:25
Yeah, the problem is that I wouldn’t even know what to ask. Exactly. That’s my problem.
25:31
so we have to, that’s our obligation as you’re right. You say, I know, it’s a health and safety issue. I mean, I’m a smart enough person to know that. So I’m going to ask that. I’m going to go to the health and safety platform, and I’m going to say, I need help with COVID. Can you help me? Right? our obligation is to say, to finish my sentence, basically. This is what she needs. Right? She might not communicate it. Well, but nor should you don’t go to your doctor and say, you know, I need help with my herniated disk. I go in there. My batteries are backwards.
26:10
What can you do? Right, right. That’s great. No, that’s great, Michael, you know, so compliance with all the new regulations, and then they you know, trainings and how busy are your people on turn? On the side of the let’s say EHS professional, like, how busy Am I going to be if I sign approved platform?
26:31
great question. not busy enough right now, in the two sided marketplace? And all? In all answer your question, we have roughly 30% of our match, ready professionals doing work. But not all the time, just getting gigs, occasionally, not a full time job yet, for we don’t we have maybe one or two people, I do have one person who’s made six figures this year. But in most circumstances, you know, folks are getting the ancillary income. It’s a side hustle for them. But our obligation and our goal is to get folks working. Our North Star for our professionals is to present opportunities, not that they take them. So we send out an APB and all points bulletin to our professionals that match the criteria and say, Are you interested in this gig and this gig looks like it’s a four day training? It’s in Globe, Arizona, it will pay overnight stay, or it will not depending upon what the gig is. And it pays the arbitrary and say $750 a day. So are you interested? And they literally will say yes or no. On the text. No harm, no foul. We don’t penalize which a lot of organizations and marketplaces do like if you’re an Uber and you decline, your rating goes down. We don’t do that.
27:56
Yeah. This is awesome. Is there anything I didn’t ask you? You’d like to add?
28:02
Sure. Enough, you? Sure. Um, yeah, we talked earlier about regulations and industry. But what we haven’t talked about is government. And in the government space, we have recently registered with the state of Arizona. I’m actually a small business and we are registering to be a Disadvantaged Business Enterprise. We didn’t talk about it, but I was actually born with one hand. And so my background being that I have a quote unquote, disability, although I’d never think of myself that way. But you know, I am a below elbow amputee, by by definition, hopefully, by being able to be a Disadvantaged Business, we’re able to assist our government in providing services internal to the state, and even ideally, we could even help ADOSH which is the Arizona department of safety and health, when they do have findings, I would like at some point to have YellowBird as a resource for ADOSH to be able to help mitigate these risks when they find people when they find issues, how do they help people rectify those issues and and keep the employees safe? Which is their whole goal, which is all of our goal in this industry.
29:25
Yeah. Yeah, I had this question because I noticed that a lot of EHS professionals they’re actually work for government or they’re self employed, right? There’s this big divide, which is not about every industry. It’s kind of specific to this,
29:40
right. Oh, yeah. On the self employed side, you know, it’s running your own small business as you do, and running a consulting practice as I believe you do as well. You know, how difficult it is to acquire new customers. And when you have a large account, whatever that orange account is, you can Normally, we’ll spend 90% of your time making sure that that account is happy and taking good care of them and whether you Yeah, stays with me. Yeah. But you take your foot off the marketing gas a little bit, you’re not creating leads, you’re not going into mixers, which, what’s that anymore? But you know, back in the day, and so we can help small consulting practices grown by using our platform.
30:24
I think you’re a great consultant because I was talking to you I learned so much new world, you know, like, I didn’t know it exists.
30:33
Yeah,
30:33
I knew it exists. Of course, of course. But a little
30:35
Yeah.
30:36
Thank you so much, Michael. I really appreciate your time here.
30:39
This is fun.
30:40
Yeah, I wish you growth.
30:44
Thank you. And hopefully we can help a lot of people in this process. That’s, that’s what my personal goal is. I really do think that we will save lives. I truly do this and that’s in my heart.
