Every Company Says Culture is Key—Here’s How We Proved It During Our IPO Process

MediaAlpha CEO Steve Yi explains what the company’s IPO process taught him about the importance of a great company culture and how to measure it

MediaAlpha co-founder and CEO Steve Yi

As a founder, taking your company public can be a bit of a strange process. After years of obsessing over the small-yet-crucial details that move your company forward, you’re asked to condense everything you’ve done into a brief pitch for investors.

A decade’s worth of strategy gets packed into a couple slides about your value proposition. The work of dozens of team members is distilled into a handful of top-line business stats. As impressive as the bottom line may be, it never quite tells the full story.

I thought about this throughout the process, but especially when it came to my efforts to communicate the real story of why our company has been successful. More than anything else, we’ve gotten where we are because our small team has been empowered to build a big business. We owe that in large part to our transparent culture.

But how do you explain that to investors in a way that sounds authentic and fits into a small portion of a short meeting? After all, every company these days says they have a great culture that positions them for long-term growth. How do you communicate that you really do consider your team members to be your most valuable asset?

What I realized during the process is that we needed metrics to tell the story of our culture, in the same way that our market share or transaction value told the story of other parts of our business. Ultimately, we settled on two key metrics that underscored what we’ve built here: our revenue-per-employee and our voluntary attrition rate.

While other companies may have other cultural metrics that tell their own story, these are the ones that helped us tell ours. Without them, I’m not sure we would have been able to persuade our investors that we really are different from all the other companies who claim to have great cultures.

Our high revenue-per-employee proved our productivity and validated our focus on professional development

Our high revenue-per-employee—pegged at $4.7 million in our IPO prospectus—is a testament to the way we’ve built our company.

Yes, we’re always going to have a higher number because our business generates so much low-margin, gross media revenue. But now that we’re a public company, we can use market capitalization-per-employee to compare ourselves to companies across a range of industries, and the results are fairly conclusive. As of the publication of this article on March 11, 2021, our market capitalization-per-employee is a little over $29.3 million. That would put us ahead of every company on the S&P 500 in 2016, according to an analysis produced then. For a more recent comparison, our market capitalization-per-employee is a bit ahead of a high-performing tech company like Netflix ($28.1 million at the time of this writing) and more than double that of Facebook ($12.9 million).

The story of our operating leverage begins with the fact that we’re self-funded. As a result, we’ve always been careful about taking on additional expenses, including when it comes to hiring. And because we’ve been a lean company, we’ve had to get more out of our team members than other companies might be expected to.

At MediaAlpha, it’s not enough for our team members to be good—we expect them to continue getting better over time. That’s why we invest heavily in professional development programs and encourage team members across the company to dig in and develop solutions to our most pressing business challenges.

This obsession with professional development creates an environment where our team members are constantly learning new skills and tackling new work experiences. Our team members become more productive with each passing quarter—and we compensate them accordingly.

Our low voluntary attrition is a testament to how much our team members like being here

The success of our professional development focus has flowed into the second workplace metric that made an impression on our investors: our low voluntary attrition. Since opening our doors in 2012, we’ve had just a handful of team members choose to move on.

The professional development that fuels our operating leverage is a big part of this. When our team members become more productive and learn new skills, they become more valuable and increase their earning potential. And when they regularly face new challenges, they tend to stay engaged with their work. Both of these factors encourage people to continue learning and growing with us.

But people also stay because of the way we treat each other. We’re a small, tight-knit group that prides itself on a culture of candid interpersonal communication. In order to reach our full potential, we stay connected with one another and create space for open, constructive dialogue that both celebrates our achievements and identifies areas for growth. This transparent culture allows us to address our challenges as a team, and it gives our team members the security of knowing how they’re doing at their jobs.

For those of us who came from workplaces with inscrutable, intensely political cultures, MediaAlpha is a refreshingly honest place to work. It feels good to speak directly, reward effort and process over results, and fearlessly address challenges together as they arise. And when people feel good where they are, they tend to want to stick around.

Great culture is measurable—it’s just a matter of finding the metrics that work for you

Ultimately, these two key metrics helped us persuade investors that we really are doing something special here.

Our successful IPO had a unique component: several investors that don’t usually invest much in IPOs chose to make substantial bets on our company. What that signals to me is that these investors believed deeply in our company and held a firm understanding of what makes us different from other organizations.

Of course, not every company will measure the success of its culture the same way. Some might look to average employee tenure, or the number of times people get promoted, or the quality of the reviews they get on sites like Glassdoor. But my experience from our own IPO process is that you do need some way to show your work.

After all, there’s a lot riding on the line for your potential investors. It’s not enough to merely say your company is built on the foundation of a great culture—you have to be able to prove it.