Being a Leader in the Compliance Industry: An Interview with Steve Marsh
2020 will undoubtedly be remembered as the year of the Zoom call. For the last eight months, the bulk of our work and social lives have been spent in front of a webcam as we chat over collaboration tools like Zoom, Slack and Microsoft Teams. But many of these technologies pre-date COVID-19 and they have slowly been transforming the way we communicate for years now.
Steve Marsh founded Smarsh in 2001, providing regulated organizations with the technology they need to meet their communications compliance requirements. Back then, e-mail and phone calls were the dominant forms of digital communications. Over the past 19 years, he has watched the needs of his customers change dramatically as the number and complexity of communications platforms have surged.
Through constant innovation and investment in technology and people, Steve has led the company, first as CEO and now as Chairman, to be included in the Inc. 5000 list for the past 13 years consecutively. Last week, Smarsh was named a Leader in the Gartner 2020 Magic Quadrant for Enterprise Information Archiving for the 6th year in a row. We spoke to him to find out how he achieved this remarkable feat.
What did it mean to you when Smarsh was first included in the Inc. 5000 list?
Starting Smarsh in 2001, I never really had any grand expectations for the business. We had bootstrapped it and not raised any money. We were just a small business trying to survive, funded like many early-stage businesses by entrepreneurs with credit cards and retirement accounts. But by 2007 we were growing more quickly and consistently. We narrowly missed the Inc. 5000 list that year and I remember being a little bit disappointed! But then in 2008, we finally appeared on the list and I'd say it was a bit of validation for the innovative work that the business was doing.
When you make the Inc. 5000, it's really a reflection of how you've grown over the prior three years. As a start-up business, you often think that you may not survive. So being on a list that recognizes growth over multiple years gave me the comfort and confidence that we were going in the right direction. It also gave us massive third-party validation. Being able to put the Inc. 5000 logo on our email signature, the press releases we could put out, the copies of the magazine that we would give out to clients, all of those things helped give us more credibility and helped us propel the business's growth for the next couple of years.
Smarsh has been included in the Inc. 5000 list for 13 consecutive years and as a leader in the Gartner Magic Quadrant for six years. How have you kept this level of consistency?
I never would have expected we would be on the Inc. 5000 list for that many years consecutively. That is 15 years of significant growth. I think it's pretty remarkable. Even from a statistical standpoint, if you look at the number of companies that apply to be on the list. If you make the list once you probably had three years of aggressive growth and you typically don't make it twice. Then looking at the number of folks that make it three or four times, let alone 12 or 13 times, it’s 1/100th of 1% of companies that will make the list that many times. And I'm proud of that.
Over the past six years, however, we really have felt our vision and ability to execute on that vision have been industry-leading. To have Gartner recognize this and rank us higher than any of our competitors in these areas is really truly gratifying. To me, I think that consistency is a testament to the fundamentals of the business and the industry we are trying to be leaders in. Our customers have increasingly stringent regulatory requirements, and that's why they use our services. And they have also been faced with the proliferation of all types of electronic communication.
Whether it's email 20 years ago, or Instagram and Slack today, content and data have to be archived. But I think a lot of those decisions we made as a very small management team in the early days also made a huge difference. We didn't have money and we didn't have third-party investment to solve our problems. So, we solved our problems with smart product development, a smart business model, pricing models, and differentiating from our competitors. Those fundamentals of our business still exist today.
How has COVID-19 affected your business and customers?
While COVID-19 has been massively disruptive, it’s not like we have brand new technology that has been created because of it. It’s true that we’ve seen the widespread adoption of technologies like Microsoft Teams, Slack, Zoom. But these services already existed and were used widely; they have just now become part of our everyday lives.
For our regulated businesses, they have to adopt these tools in a compliant way. They have to archive them, and they have to monitor them. Historically archiving has been single modal: it'd be email or text message. So, you're looking at a text thread. If you were looking at audio in an archive, it was probably a recorded phone call.
If you look at something like Teams or Zoom, each meeting might be 45 minutes, an hour, whatever it ends up being, and people are doing this all day. In the side panel, there are often text conversations or chats that are taking place. There are files that are being transferred. There's audio throughout it all. You need to be able to see that Joe Bloggs has entered a call 15 minutes late, then he dropped off the call, so some audio he will have heard and some he will not have.
And if they want to search for the point in the conversation where Joe says, "iPhone" they need to be able to find that spot in the meeting, see the video, see if I was sharing slides, see what was in the chat thread, who was in the room, who had been there before and to re-experience these meetings. I think that's where a lot of our product development is headed.
I think that's the unfortunate reality for these compliance teams. You know, and it's going to be much more sophisticated archiving and replay tools as well as the supervision and monitoring that needs to be run on top of them.
Which technologies will play the largest role in innovating your business over the next 13 years?
Without a doubt, Artificial Intelligence, Machine Learning and Natural Language Processing are the technologies that will drive the most innovation in our industry over the next decade, and beyond. The sheer volume and velocity of data that businesses need to process in order to ensure compliance is truly astounding compared to even three years ago. Businesses are struggling with their existing compliance technology to cope with this as well as the constantly evolving variety of communications data.
We recently announced our acquisition of Digital Reasoning, driven by this exact problem and where we see the industry going over the next ten years. Harnessing the power of Natural Language Processing, Artificial Intelligence and Machine Learning will enable us to ensure that our customers can strengthen compliance initiatives regardless of the scale of communications data they have to manage.
To us, this is the future of our industry: Communications Intelligence. It’s a future where compliance teams can seamlessly capture human data and make sense of it at scale. This won’t just mitigate risk, it will empower businesses to find insights that are critical to growth and innovation.
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