Transcript
Speaker: a rock band from Brazil, a music festival in Bulgaria, a fruit wholesaler in Hong Kong. They are not going to find you on the Yacht & Can, so you need to do a lot of outreach, a lot of really high quality, targeted, relatable outreach.
Speaker: Hello and welcome to Edison TV. Today I'm speaking to Omar Handy, who is Chief Executive Officer and founder of Pathos Communications. Pathos has been listed on AIM for just over a year and the company is focused on bringing effective PR to the masses, to the small and medium-sized enterprise.
Speaker: The company's doing this through using innovative technology workflows and a payback success model to deliver effective PR and and scale the business as it grows.
Speaker: Omar, many thanks for coming in today. Thanks for having me. Good to see you again. ah Can you start by introducing Pathos for the audience and and in particular, yeah discuss what problem that that Pathos has been set up to solve?
Speaker: The thing that I think about a lot is just how invisible most businesses are in the media. And if you ask any politician how do they start their day, they start the day by reading the news.
Speaker: And if you've got a situation where 99% businesses are not in the news, you're asking for trouble because don't be surprised if politicians then create policies that work for huge businesses. Maybe they don't even work for huge businesses. and But if you're lucky, they work for huge businesses, but they definitely don't work for the small businesses. Those small businesses that were always told in pretty much every democracy at election time, they are the backbone of the economy, but the backbone is invisible.
Speaker: So no one thinks about it or cares about it. So that's a really important problem and it's a problem worth solving. don't think there's anything bad or unethical or evil about the PR industry, but PR by its nature is something that is an unscalable, expensive, inaccessible service.
Speaker: and I had to work in the media for 10 years to understand how it works and be able to to to do PR, ah the act of PR. You can't scale me, you can't clone me.
Speaker: What's interesting is we now live in a time when we've got technology, we've got AI, and we can have the tools to actually take a function of a PR expert and allow an ordinary, hardworking, talented person, but to allow that ordinary person to have an extraordinary skill level, an extraordinary commercial value. And you can take that traditional agency model, but actually virtualize it.
Speaker: What that does is it means suddenly PR can work. for the smaller businesses in the world. And and the best ah analogy, I think, is with websites. You know I'm old enough to remember and you know maybe you're old enough to remember when only big businesses had websites and websites cost six figures.
Speaker: And those websites are still being made. There are people buying $100,000, $200,000 websites. But then there was this amazing technology called WordPress templates. And suddenly we would expect every business to have a website. we We might not trust the dry cleaner with our favorite shirts if they don't have four or five page websites with a booking link. And I think PR is just at the beginning of that same journey where technology can actually democratize it. And it's a big opportunity because we're talking about, you know, 98, 99 percent of all businesses.
Speaker: and It's 400 million SMEs in the world. You mentioned that 400 million figure and obviously it's a huge addressable market, but equally it's pretty fragmented and pretty hard to to reach. and And obviously you've got to scale this business effectively.
Speaker: um Can you talk about how how Pathos is addressing those challenges and the and and the processes and technologies that you're putting it? Yeah, absolutely. And if if you want to sell to SMEs globally, and one of the things I really admire about Pathos is how sort of naturally global the business is. We've got clients in 80 countries and up until now, we only really operate in English.
Speaker: um that If you want to sell to those hundreds of millions of SMEs, you can't do what PR agencies do and pop champagne on a yacht in Cannes celebrating your latest award win and expect, you know, and and these are real examples of Pathos clients. um A rock band from Brazil, a music festival in Bulgaria, a fruit wholesaler in Hong Kong. They are not going to find you on the Yacht & Can, so you need to do a lot of outreach, a lot of really high quality, targeted, relatable outreach, and that's one of the things we're really good at.
Speaker: And you talked about your distributed customer base just now. It's not really any material concentration in one geography or one vertical. you know What does that mean for your revenue quality and and resilience? And I guess what steps are you taking to um you know a drive jar drive the repeatability, the the predictability of your revenues, and also continue expanding that funnel of first-time users. So we are very distributed. and I spoke to a ah potential shareholder earlier today, and he said, oh
Speaker: you know I've been burned but you buying shares in these these agencies before. And I said, well, well well you're going to love Pathos because all of the things, you know the the key person risk, the customer concentration risk that sort of naturally and inevitably occur with an agency, we really don't have. So very, very distributed.
Speaker: um yeah know i think our our biggest customers are you know a couple of percent. or a few percent of revenue. um and And we're just continuing to to to fuel the machine.
Speaker: you know as ah On a good day, 20 or 30 new customers will sign agreements with us who've never signed before. And um technology and artificial intelligence are a key part of of your business and how you're going to grow the business and particularly grow the business scalably.
Speaker: um So you've got Pathos Mind and Priscilla. um Can you talk more about those and and also how those two products are key to driving growth and operational leverage?
Speaker: So technology is really, really at the core of what we do. And I think back to when I first set up Pathos, where yeah before setting it up, there wasn't really a business plan and there wasn't particular ambition. I was expecting to join join the ranks of the 145,000 PR agencies that are in the world. And typically they're run by people like me. They're ex-media people who've decided to monetize their skills, monetize their knowledge and create really really good lifestyle businesses. The average revenue of a PR agency globally is $700,000. So you think of, you know, ah a media practitioner, turned PR, 10 clients, five grand a month retainer. It's a nice lifestyle business.
Speaker: It was technology that allowed the ambition of Pathos to go well beyond that. And what I've been doing over the last seven years with a great team, that's a phenomenal team, gathering up all the data we can imagine. We've got seven years of training data.
Speaker: We're talking about you know recorded phone calls, transcripts of Zoom meetings, email exchanges, WhatsApp exchanges, text exchanges, the outcomes of those meetings, whether it was a good outcome or a bad outcome in terms of someone becoming a client, not becoming a client. And you take that massive data which, and I don't believe anyone else in the world has has really executed on SMEPR to this scale. So I don't don't think anyone else has that data. You take that data, you feed that to technology, and then suddenly all the things that Omar was doing seven years ago when Pathos was a one person business, each function of Omar of 2019 becomes a function of Priscilla, the virtual publicist. And to tell you a little bit about those two tools. So Pathos Mind is our stack of AI agents.
Speaker: we've we've built them up over the years, it's our proprietary technology. And it does things like finding news hooks, looking at news trends, researching who would be a good client, really fueling the efficiency of the business if we're only reaching out to people who we know are quite likely to be interested and to be quite publishable.
Speaker: That's a big help. um And that's the stack of AI agents and both human and virtual employees use PathosMind. So my human colleagues,
Speaker: when they're preparing for a call, whether it's a sales call or a content call or a client success call, they will go into our CRM, click on the PathosMind link, and they'll have a lot of really helpful information, and it's getting better and better as we scale our technology.
Speaker: Just like those humans use PathosMind, a virtual employee called Priscilla can use the same tools and communicate with clients just like a human would, whether it's WhatsApp or email or text.
Speaker: And that's really the vision with Priscilla. We're expecting to get her to... and we do think of her as a her. It's not a chat bot. That's not the business we're in. There are enough chat bots in the world. The reference point for us are really virtual humans. AI companions. There are people forming meaningful relationships with AI. I oftent think that's a mainstream thing, but it shows that the capability is there. Humans have that capability and the technology has that capability. It's just not really being applied in things like PR for SMEs.
Speaker: that That virtual employee philosophy, that's really informing how we develop Priscilla and the vision by the first half of 2027, we expect Priscilla to reach general availability. Meaning we can say to you and we can say to any business owner or any entrepreneur watching this, you now have a virtual publicist.
Speaker: She works full time, she's got seven years of experience, she's got a perfect memory, she's been very well trained and you don't have to pay her a salary and of course what she's going to do is create opportunities for her human colleagues to say dan i've just been looking at the conversation you've had with priscilla she filled me in i think the article she's written is good um i do think she understands your business quite well but it's time to give it the human touch and get this over the finish line i've just sent you an agreement please sign it
Speaker: and So that's very much the vision is human employees, virtual AI employees working together and building a bigger and better business. Interesting. so So both using technology, both to expand the funnel and and and convert business and then to deliver a really good quality of service in a scalable way. um Can you discuss a little bit more the timing of the rollout? Because you've had your first half trading update and you started to show, I think, benefits of the operational leverage. So they're being rolled out in some way, but obviously they're going to general availability in the future. Can you just give us more of a feeling in that respect? Yeah, absolutely. And I can see how that can be maybe a little bit ambiguous. I think the best way to describe it is Priscilla version one, good enough for internal use and more than good enough to improve our processes internally, but not slick enough and frankly not human enough for the consumer.
Speaker: Priscilla version 2, which is what we're expecting to happen over the next several months, will be slick enough, bug-free enough, human enough for the end user to actually communicate with her and and feel like they have a publicist. But already with version 1, which really we developed on a comparative shoestring last year, um ah even with Priscilla version 1, we announced a few months ago in early tests she is booking seven times as many meetings as her human colleagues.
Speaker: Now as a human that might make us uncomfortable and I can understand that but you think about the level of research. I could do as good a job at Priscilla but it would take me probably 20 minutes of research per outreach message.
Speaker: So you know if you're sending a hundred, a thousand, ten thousand messages you need a lot of people. And just to discuss your your progress and outlook, maybe before we go into that, can you discuss your, guess, your key KPIs? Obviously, you're building a business to scale. um You're winning new business, more new clients every year, but but but also growing your repeat customers quite significantly. Can can you run us through the the key KPIs that we should look at in Pathos to really um measure your ability to scale?
Speaker: Of course, i mean, obviously you've got the standard financial KPIs, but I don't think your viewers need me to you know draw their attention to revenue and EBITDA. I think the things that really show the the quality of the business and the potential for really enduring growth rather than just a couple of years of running on the treadmill until you get out of breath and jump off, and that enduring growth comes from quality of revenue. And one of the things that I've been working on, supported by really a phenomenal team over the last year or two, is growing our repeat business.
Speaker: Key to that is developing the product and we have a relentless focus on product development. few years ago we had one product line, news articles.
Speaker: Now we have 15 product lines and that's really important because once someone is working with our repeat business team and they're finding opportunities for them in the media, people get bored.
Speaker: And you need to be able to move, if you want to, from just having articles to having more of a balanced diet. Articles, podcasts, interviews, TV interviews, compilation books, solo books, um native content that can amplify your existing media. And we're continuing to work on that. And whenever we see an adjacent product or an adjacent opportunity, we try to develop that that capacity. ah That's worked.
Speaker: ah First half of this year, 36% of our revenue was coming from repeat and reoccurring customers, and that's trending upwards. At the same time, the top of the funnel is you know developing very, very nicely. We have a new sales team management structure, um which grew new client signups by 30% in a month. um So the the top of the funnel is broadening out, but then once people are in, they're staying for longer and spending more and more and more. And it's very satisfying to us and very important to us that we support our clients on their journeys.
Speaker: And sometimes those journeys are not in a straight line. And sometimes those journeys take many, many years and have some unpredictable twists and turns. And sometimes even, I mean, it's is it's ah it's a good endorsement for us. i mean, sometimes we have an individual who we've worked with before who perhaps has exited a business. You know, we recently had someone who...
Speaker: I signed up in 2021, you know, when I was still, you know, working for a living instead of just being being very, very executive. I signed him up in 2021 and he's come back now with ah you know the biggest piece of work we've ever been asked to do for him with a new business. um And that's very, very exciting. And I think that can give a lot of confidence to us internally, gives us a lot of visibility over what the business can do, say over the next 12, 24 months. um But also externally, I think that gives people a lot of comfort.
Speaker: Thanks. and And then just looking forward, um you know, what would be the key milestones? What are the key things that you want to achieve over the course of the next 12 months, 24 months that um that that will keep you on that strong growth trajectory, but also be the potential accelerants for the business?
Speaker: Yeah, of course. So so we we have a ah four pronged growth strategy. They all work in unison quite nicely and actually support each other. Starting with the boring stuff, just organic growth.
Speaker: We've built a pretty well-oiled machine. It's been built to scale almost from day one and creating more scale to that is pretty important. Of course, as you scale, if you want to maintain quality, you'll need to manage things differently and change the structure. And we recently did that with our sales team and the geographical expansion. We're in 80 countries, but some of those countries, you might only have a handful of clients and we could do a lot more.
Speaker: We've invested in a dedicated APAC Asia Pacific team recently. It's early days, but looking very, very promising. And you know people talk about APAC like it's a region. sort of half the world isn't it? so big big opportunity there we've done some tests in um Spanish language sales for Latin America so going more global and really embracing the fact that there are quality businesses that deserve their story to be told really pretty much anywhere in the world and that's important to us and again that sort of diversifies the revenues further. So we've got organic, we've got geographical, um of course the technology, I think when we do get Priscilla to general availability will be you know a magic moment that I've had in my mind, certainly till at least 2022. So it's been a four year journey, really waiting for the technology or at least the access to the technology to catch up. with the vision that I've had and the vision that our team have had, that we really, really believe that every business deserves a publicist, just like every business deserves a bookkeeper and every business deserves a website. They deserve a publicist. It it is a core business function. um So that's going to be very, very exciting and how that can really help help us accelerate even further. And the other thing are acquisitions. and i mean, one of the perhaps slightly surprising things to me just after we went public and you know in in the months and since, is it is still the dream of a lot of entrepreneurs to be part of a public company.
Speaker: And there are partners, suppliers, referrers, who we've worked with quite closely for a number of years, who we're actually having quite interesting conversations now about whether there can be some kind of merger, or some kind of acquisition. And a lot of them bring with them great communities of clients that perhaps have only just dipped their toe in the water of PR or visibility or profile publicly.
Speaker: And I'm sure they'll react quite well to having our 15 product lines put out in front of them. um I think some of them will be like kids in toy shops, frankly. So there are some really, really interesting opportunities there. And there are lots of entrepreneurs who want to be part of something bigger,
Speaker: one support in maybe some of the um less creative parts of scaling a business, you know, like finance and things like that, which of course a public company is pretty strong at doing. um and And they want to be part of something that can but can really be an enduring business. um And they're willing to to to value their businesses in a very, very sensible way that can be accretive to us. So some really, really interesting opportunities there. And well, it sounds as if there's an awful lot to to look forward to, look really look forward to following the progress. And many thanks for joining me today. Thanks, Dan.
