Profesional Diversity Network (NASDAQ: IPDN) Management Interview


Profesional Diversity Network
Executive Chairman: Jim Kirsch



WSA:  Good day from Wall Street.  This is Juan Costello, Senior Analyst at the Wall Street Analyzer.  Joining us today is Jim Kirsch, the Executive Chairman for Professional Diversity Network.  The Company trades on NASDAQ, ticker symbol, IPDN.  Thanks for joining us today there Jim.

Jim Kirsch:  Thank you Juan.  It’s good to be back.

WSA:  Certainly, so for some of our listeners that didn’t catch our last interview, can you give us a history and overview of IPDN?

Jim Kirsch:  Certainly Juan.  I founded the company approximately 12 years ago to help Americans achieve their professional goals.  And we do that by connecting them with employers who value their diversity and look to create a workforce that’s reflective of America.  We have millions of registered users that are comprised of our numerous different segments that we operated primarily professional networks for women, for African Americans, for Asians, for Hispanics or individuals with disabilities or members of the gay community and veterans and their spouses.

And what we have found over the years is that this nation is very encompassing and welcoming and desirous of hiring a diverse workforce.  We have been very busy in the last several months expanding and growing the company.  We recently received a $21 million investment from a group from China, who is desirous of expanding our women’s networking to begin with, in China.  The reason for that is as the Chinese economy has matured, there are a lot of women entering the workforce and achieving levels of professional executives.

And to date there is no significant player, even LinkedIn hasn’t achieved the same sort of saturation success it has in China as it has in the United States.  And therefore we’re in the process of expanding our women’s networking operations into China and that will be total web based profile system where Chinese women can enjoy our new international association of women’s society.  And they can network with other professional and successful and accomplished women in China but also internationally as we have the national association of professional women in the United States.

So, we’re really excited about that Juan.  We’re excited about the investment that was made in us and we’re excited about our expansion into China.

WSA:  So bring us of the speed on your news and activity there including partnerships and recent results?

Jim Kirsch:  Certainly Juan.  Well, the investment of $21 million provided the company with an outstanding opportunity to clean up the balance sheet.  So, we’re in an all cash position we have no debt, no short term debt, no long term debt, even our accounts payable are super clean.  We have million dollars of cash in the bank.  In addition to that we did take part in those proceeds and we purchased back the considerable amount of stock through a tender offer and a court sale opportunity, which was really great because we firmed up the shareholder base considerably and we also at the same time created a great capital structure for the business going forward.

So, on the balance sheet side certainly a dramatic change was there in the last few months, which I don’t think many people are aware of.  The second thing is while we’re expanding to China we’re also continuing to enhance our operations in the United States.  And as we reported recently in our annual report we had a material improvement in our financial performance in terms of striving to profitability and coming into a very narrow gap of approximately $380,000 EBITDA deficit in the fourth quarter.  And so we’ve been able to really work towards getting the profitability domestically in the United States.

We’ve done that in a number of ways.  One of which are partnerships that we have announced recently with leading organizations that serve diverse Americans including the NAACP, the National Urban League, Women in Biology, Women in Technology and the National Association of Women MBAs.  So, we’re really expanding in the United States our influence and our efficacy while we seek to travel to China where we have also begun commercial activities.  We had our first commercial activity of that in China on March 25th.  We had over 2000 participants in that event, which was extremely successful and also profitable.

We have two more events that we’re doing this month on April 26th and 27th in China.  So, operations have commenced in China.  We see a bright future there, tremendous opportunity for expansion, a very large addressable market.  And leveraging off of our experience and our diverse membership here in the United States.

WSA:  So, what are some of the key factors Jim that you feel make Professional Diversity Network unique and able to capitalize on some of the key trends that you see in sector?

Jim Kirsch:  Well, domestically we see a labor market that’s tightening which is creating more demand for services such as ours where we connect job seekers to employers.  We do some unique things in addition to our website where we have activities similar to LinkedIn.  We also are conducting about 20 events around the country where we’re connecting employers with our registered members.  In addition to that we are processing approximately 6000 career consultations a day over the phone with registered users who we have matched jobs [with] and we seek to enroll or complete the employers’ application with the job seekers on the phone.

There is not a lot of recruiting companies or employers for that matter who will go to the effort of actually connecting with the job seeker over the phone to tell them about a particular opportunity, explain the opportunity and make sure that it’s a good match for them before they start the application process.  We monetize that through a cost per application model, which is really terrific for employers because it’s pay for what you get, a pay for performance.  So there is absolutely no risk.  If you don’t deliver a qualified candidate you don’t pay anything and rather than deal with candidates who fill out a form online with no interaction whatsoever from a recruiter.

Our process allows for us to go through a clearly in-depth qualification process to make sure that the candidates not only are interested in the job but meets the basic qualification.  By that I mean basic education level, work experience and other individual competencies that are associated with the job.

WSA:  Sure.  And what are some of the key goals and milestones that you’re hoping to accomplish over the course of the next six to 12 months?

Jim Kirsch:  Well, we continue to refine the business to increase the revenue domestically and focusing on profitable revenue while continuing our cost containment.  We’ve done a great job on the cost side over the past 18 months.  Now, we turned our focus towards growing revenues, expanding the sales force, expanding our marketing efforts.  And then of course the expansion with China which is really the most important portion of our business right now is our China launch and getting the China launch in a position where it can set us up for long-term fundamental success in Asia and throughout the world.

We are projecting internally that even in the first year of operation China will be a significant portion of our revenue and we look to it to be profitable in 2017.  In 2018 we believe that we’ll make a material improvement in our operation both on the revenue side and on the income side primarily driven from the China expansion.

WSA:  Certainly, and perhaps you can talk a little bit about the key management team  behind the scenes?

Jim Kirsch:  Sure, certainly.  So personally, I have extensive experience both in the public and private sector.  I served in elected office for 12 years.  I have also been the Chief Executive Officer at a company before this where we operated throughout the world various locations near the Middle East, Far East, Central America and North America including Canada.  I have also founded this company created the name Professional Diversity Network and nurtured the company to the point where it’s at now.

In addition to myself we’re lead by Michael Wang, our new CEO.  Michael has over 20 years experience as a prominent lawyer in Beijing and he most recently was one of the four partners of GNET, which is a very prominent buyers network in China.  Michael is actively leading the business both in the United States and in China.  Michael is directly supported by a fantastic management team here in the United States including Kathy Butkevich, who is the Chief Executive Officer of our National Association of Professional Women subsidiary.  Joseph [Indiscernible] [00:12:43], who is in direct control of our recruitment business.  And in addition to that we recently brought on a new Chief Financial Officer Gary Xiao.  And Gary has a lot of experience in business and also is a graduate with distinction from the Law School of Business at the University of Michigan.  So, we have a phenomenal team.

Star Jones is our President.  Star is known as a not only a celebrity but an influencer and she has a very long and successful history of helping others achieve the American dream.  And it’s a great thrill for us to have the opportunity to work with her as she enhances our women’s networking and our diversity recruitment business.   She works very, very hard.  She is very diligent, very responsible and very creative.  She is an outstanding executive.  And Chris Wesser, our Executive Vice President and General Counsel, who helps us connect the business effectively day in and day out.

WSA:  Thanks and so as far as investors and the financial community what are some of the key drivers there that you wish perhaps they better understood about you guys or what’s some things that make you guys unique that you wish investors had a better grasp on?

Jim Kirsch:  Well Juan, we have an incredible social mission of helping all Americans achieve their professional goals.  And we help them by connecting them with employers and also helping them obtain the level of education or specification that they need to continue to advance and climb the economic ladder.  So it’s important to note that there is a very strong social component to this mission.  But the social component is harmonious with the economic component because as we’re helping these people it helps our bottom line as well.

So, I think there is a whole class of investors who are interested in investing in companies that make America better and better every single day and is willing to invest in American people.  The second thing is that it’s gone largely unnoticed that number one, our capital structure is so much greater enhanced and before the investments.  As a matter of fact we’re probably trading at near the same levels as before we receive the investments.  In addition to that we’ve also retired or taken so much stock into the company and to large insider holders that the shareholder base is very tidy right now and it’s largely comprised of the owners who invested in us from China inside management and long-term holders  of the stock that have been in since the public offering.

The small amount of float that’s being traded between individual investors, and we think that as more people become aware of the story and choose to invest in a company like ours, there is great opportunity for those investors to participate in the future success of the company tremendous opportunity.

WSA:  Great, well, once again joining us today is Jim Kirsch, the Executive Chairman for Professional Diversity Network, which trades on NASDAQ, ticker symbol IPDN.  Currently trading at 8$.07, the share market cap is about 32 million.  And before we conclude here Jim, to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?

Jim Kirsch: To me in my personal opinion we have a company that is in a strong cash position with absolutely no debt.  We’re marching towards profitability in the United States in a very large addressable market.  At the same time we’re benefitting from the experience of our new investors from China and launching in the world’s second largest economy with a concept that it’s fresh and new in China, which is women’s networking.

And that market opportunity is incredibly large to have women have profiles and be able to network together both online and in person and to do that in China is tremendous opportunity, tremendous opportunity.  So, this company has the potential to really grow dramatically over the next 18 months and I’m very excited about that opportunity and looking forward to being a part of that growth and success.

WSA:  Well, we certainly look forward to continuing to track the Company’s growth and report on your upcoming progress.  And we like to thank you for taking the time and join us today Jim and update our investor audience on IPDN, it’s always good having you.

Jim Kirsch:  Thank you so much Juan.  Have a great day.

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