After his leukemia diagnosis in 2010, Larry Lacerte had plenty of time in his hospital room to contemplate his life and fate. But the father of seven, then 58 years old, was loathe to complain. "I don’t think I’d do anything different,” Lacerte says, sitting in the elegant dining room of his Highland Park home. Few of us might be so sanguine. To those who know him, Lacerte is a quiet but influential force in the Dallas business community. He sold his first company, Lacerte Software Corp., to Intuit in 1998 for a whopping $400 million.
Three years later he launched ExponentHR, a technology firm that automates functions like payroll and human resources.
These days Joyce, his wife of 29 years, is by Lacerte’s side as he wages an ongoing battle against leukemia that continues to beat the odds. After two bone-marrow transplants, he’s now in remission.
But the road has been anything but smooth. Known for avoiding the limelight, Lacerte says he is happy to share his personal and business story now. But “not because I’m humble,” he says. “It’s because I’m scared.
“Previously, I have not done this personal of an interview,” Lacerte adds. “My concern is that it is difficult to express my joy without being misunderstood. I didn’t beat cancer; [the hospital] and the prayers of my friends and family saved my life.
“When you have a long-term medical issue, nothing is a straight line,” he says. “I do not want the interview to appear to be patting myself on my back.”
No one who reads this story will accuse Lacerte of that.
Lacerte’s circle of friends, many of whom he met years ago in the Dallas chapter of the Young Presidents’ Organization, describe him as generous, optimistic, and entrepreneurial.
“Larry’s got a mind like a steel trap,” says Steve Utley, president and chief executive of Dallas-based JLA LLC, a privately held investment company. “He’s very creative and a pragmatic thinker. There are very few people in life that you come across that have the ability to take in a tremendous amount of information and form a world view. He is wise beyond his years.”
Utley views Lacerte as a mentor of sorts, one who has helped guide his business decisions. Utley’s other company, First Worthing, volunteered as a beta customer for ExponentHR when it launched in 2001.
Much as he had with Lacerte Software, which specialized in online tax preparation, Lacerte was looking about in the early 2000s for an industry that needed more automation. Human resources fit the bill.
ExponentHR helps automate payroll, benefits, and human-resource functions for more than 500 client-companies and their 100,000 employees. Its software enables firms like the Dallas Cowboys, FC Dallas, Great White Trucking, and PlainsCapital Bank to manage employees by providing real-time access to data anywhere in the world.
Employees can self-manage their benefits, Lacerte explains. Human resources and payroll can do everything “exponentially” faster because of the automation. And CEOs and CFOs have access to a global-management tool. When factory-floor managers are assessing overtime issues, they have access to real-time information instead of two-week-old reports.
Lacerte estimates that ExponentHR’s market potential is 5 million businesses strong, including every single team in a professional sports league. “There isn’t a business that this doesn’t fit,” he says.
The Cowboys signed on in December 2011, and FC Dallas after that. Professional sports teams deal with unique tax consequences, as they’re susceptible to local taxes. The teams are taxed where they play, and somebody has to keep track of all that.
“Instead of hundreds of man hours, we are able to automate it,” says Fidel Baca, who is ExponentHR’s chief marketing officer and also
Joyce’s brother. “It’s economical, it’s efficient, and it’s compliant.”
ExponentHR charges its customers on a per-employee, per-month basis. When the recession hit, employee numbers dropped. But last year, ExponentHR saw 5 percent to 7 percent in organic growth among its clients as they began to hire again. Companies are gaining access to capital and acquiring companies, both of which are positive economic indicators, Baca says.
Dallas-based ExponentHR works mostly by referral, which is important for Lacerte, who says there’s nothing better than a satisfied client. The company’s competition—and Lacerte’s main target—is HR outsourcing industry leader Automatic Data Processing Inc. (Nasdaq: ADP), which has 600,000 clients and processes 80 million employees.
With 120 employees, ExponentHR is small, but growing by 25 percent to 30 percent annually. Revenue in 2012 was expected to hit $15 million. Lacerte is optimistic the company will double in size in two years. He’s also staffed up and ready for Obamacare, which he expects will have a big impact on businesses.
“Whatever direction it’s going to go, we can respond to that,” he says.
As a third-generation entrepreneur, Lacerte knows what it takes to build a business.
His parents moved to the United States—first to Florida, then to California—from Vancouver, British Columbia, when he was 8, the
youngest child of six. His Canadian-born father, who started a dry-cleaning business and also worked as a farmer and bookkeeper, toiled for others long enough to make money and break out on his own.
“He always said the best person to work for is yourself,” Lacerte recalls.
Self-made, with only 12 credits of college courses, Larry taught himself how to write computer programs. He started Lacerte Software on a shoestring in his Long Beach, Calif., garage in 1978. He didn’t know it at the time, of course, but his namesake tax software would help revolutionize the tax-preparation software industry for accounting professionals.
When he met Joyce in 1982, Lacerte had 17 employees and a modest income. For every tax season kickoff, the two would cook up a huge breakfast at 2 a.m. for their employees. Lacerte worked with them in the trenches, and the Lacerte children grew up with the company.
As his company and his family both expanded, Lacerte was keenly aware of the inordinate amounts of time he spent commuting to work. He began considering moving the company to an income-tax-free state: Florida, Washington, Alaska, Nevada, maybe Texas.
Dallas, he figured, had the Cowboys and Dallas/Fort Worth International Airport, affordable housing, friendly people, and a central location. The close proximity of schools meant he could easily sneak away to a game or school activity.
The company moved here in 1990, with a number of its 100 employees choosing to relocate.
Shortly after, Lacerte remembers receiving a phone call from retailing icon Stanley Marcus, asking him to lunch. The Neiman Marcus legend didn’t have an agenda for the three-hour lunch. It was just a friendly visit.
“Stanley said, ‘My family used to do this when businesses moved to Dallas to welcome them,’ ” Lacerte says of Marcus’ gesture. “This was so different than California. Dallas is just a real friendly place.”
By the time he sold the company to Intuit, Lacerte had 350 employees, $100 million in sales, and had captured fully 35 percent of the professional tax-preparation market.
“I’ve very proud of it,” he says of the company. “Basically, there is code in there somewhere that goes back to 1978. It was a fun ride.”
Turns out it was a lucrative deal for his employees, too. As a thank-you to them, Lacerte and his brother, Phil, doled out $40 million in bonuses. Employees were guaranteed a job for a year, and also received Intuit stock options.
“For 20 years, this was like a child to me and, anytime you’re a parent, ultimately the child is going to take off on its own,” Lacerte says. “I felt good about the timing and the company that was buying it. I couldn’t think of it being better for my employees.
“Anybody who thinks you get there alone is insane,” he adds. “There are so many people I’m grateful to.”
At the top of that list is Joyce, his biggest champion. Lacerte says it was Joyce who saved his life in February 2010, when he learned he had acute myeloid leukemia, a cancer of the blood cells in the bone marrow.
The two had been on an ocean cruise and disembarked a day early, because Larry wasn’t feeling well. Joyce took him to the emergency room at a hospital in South Carolina for what they thought was a leg infection.
“An hour later, [doctors] told him he had leukemia and he needed immediate treatment,” Joyce recalls. “By 4 a.m., he had a 104-degree temperature. He was going downhill quick. They told us to bring our kids.”
A few days later, Lacerte was airlifted to Dallas’s UT Southwestern University Hospital-Zale Lipshy. He wanted access to world-class doctors. But he also knew he was in bad shape and needed to be close to home.Joyce noticed he wasn’t able to recall dates and details, so she alerted the doctors. A CT scan revealed a brain bleed. Says Larry: “24/7, Joyce was my advocate.”
Lacerte received his first bone-marrow transplant in May 2010, from his older brother. Then, however, he relapsed. Baca helped organize bone-marrow transplant drives, which added more than 2,000 people to the registry. Baca says he knows of at least 10 matches in the last year and a half that resulted from those drives, saving half a dozen lives.
Doctors also tested Lacerte’s sister, who turned out to be an unexpected match. Although he’s been in remission since the second transplant, he isn’t out of the woods yet.
Last February he suffered from septic shock and nearly died. He’s also been hospitalized with pneumonia, and his immune system is compromised. That makes it difficult to walk around the neighborhood or spend much time outside the house or office, for fear (last year, at least) of the West Nile virus.
Through it all, however, Lacerte’s “survivor personality” shines through. Joyce says her husband has the attitude that, “ ‘If somebody is going to survive, then it might as well be me.’ When his doctor told him he sees him celebrating his 85th birthday, Larry said, ‘85? My dad lived to be 91.’ ”
David Michel, who’s been in a YPO forum group with Lacerte for years, says that even when the odds were “crazy long,” Larry never gave up.
“Looking back, it all makes sense to me now, because that’s also why he’s such a successful entrepreneur,” says Michel, who’s chief executive of Catapult Health, a health services company in Dallas.
Lacerte, for his part, says dying wasn’t an option. “It was easy for me,” he says, squeezing Joyce’s hand. “With Joyce, there’s an age difference. She’s nine years younger than me. I could not see leaving her alone for 30 years, although she’d probably be dating.”
Adds Joyce: “He knows I’d never do that.”
Travels with Larry
All throughout his illness, Lacerte has never stopped thinking about the business. After eight days in a coma from the septic shock, Lacerte woke up, told Joyce he loved her, and asked about the kids. Then he asked for his iPad to check in at the office.
“I love my work,” he says. “I love the people I work with and I love my clients.”
After selling Lacerte Software, with more than $200 million after taxes in his pocket, Lacerte considered taking some time off. He asked his wife and children how they felt about taking a six-month luxury cruise to the Panama and Suez canals. They quickly shot it down: The idea of spending all that time at sea with only their parents and no friends their age seemed crazy to them.
Instead, they bought a home in London and used it as a jumping-off place. Over the next decade they traveled across Europe and to South Africa, China, Japan, and South America. When they first arrived at their six-story British home, they brought only their clothes.
The family didn’t seem to miss their 26,620-square-foot Preston Hollow home with its baseball field, bowling alley, indoor pool, racquetball court, and private lake. “I think we all realized what’s important, and it’s not things,” Joyce says.
Lacerte is full of thoughtful expressions, including this one that he admits isn’t original, but is still a favorite: “God made people to love and things to use, and don’t get them backwards.”
Even so, Lacerte took only a few months off before starting three years of development on what would become ExponentHR. Most people expect that launching a company with millions of dollars in the bank would be easier than starting as a hungry entrepreneur. Not so,
“With my first company, every penny had to go to” running it, he says. “With the second company I had access to brilliant talent, funds, and a good reputation. I thought I was going to get there twice as fast, but there are no shortcuts. You have to build a foundation. I wasn’t looking for an exit strategy. I was looking for a business.”
About 10 percent of his employees from Lacerte Software now work at ExponentHR, partly due to nepotism and partly because it was a tightly knit group to begin with. Baca, Joyce, and Larry try to calculate how many family members work at the company, but it’s hard to pin down. There are at least four or five families and about a dozen extended family members. The rest of the employees were referred by each other.
Lacerte says he doesn’t want to be surrounded by people who agree with him. He wants to hear passionate opinions before making the final call. “Unlike American Airlines, I don’t ever want to have an adversarial position with my employees,” he bluntly says.
The family-like atmosphere also means that they argue like siblings, but ultimately do what dad (and mom) say, Baca jokes: “Although there are strong personalities, everybody understands that once the decision is made, that’s the direction we’re going to go.”
Adds Lacerte: “But if we find three weeks from now … we can change that decision fast. We don’t have to spend a year discussing it until everybody is happy. We can make the change because we’re nimble.”
To that point, Lacerte is passionate about not having “middle management” in his company. He also doesn’t have a secretary, preferring to use technology to do it faster himself. He has a policy of never hiring management from outside the company.
“I always promote from within,” he says. “It’s demoralizing to hire from outside, and it’s unrealistic [to hire] someone not in the trenches. At this company, managers are in the trenches. Programmers still program.”
Exceeding the Dreams
Lacerte is known as a straight shooter, donating his time to organizations he’s passionate about. He sits on boards for the Cox School of Business at Southern Methodist University, St. Mark’s School, and Universal Display Corp. (Nasdaq: PANL). In September he joined Dallas-based Blue Calypso’s board of advisors.
“I like the cutting-edge stuff,” he says. “I don’t do anything [just] to put my name on it.”
The family also is generous with its money to causes revolving around medicine, children, and education. In 1999 it donated $1 million to establish the Lacerte Family Children’s Zoo at the Dallas Zoo.
“Larry is not a person who tries to become famous,” says Dallas Mayor Mike Rawlings, who met Lacerte through YPO and bonded as Boston College supporters, as their kids both attended the school. “He’s a great guy who puts his family first and is quiet, thoughtful, and generous.”
Lacerte is an experienced Spades player, a voracious reader, and a history buff. The naturalized citizen loves American history so much that he named several of his children after presidents, including Madison, Monroe, and Quincy.
The family lived in that massive Preston Hollow home for 20 years, selling it in 2009 for about $29 million to Dallas billionaire Kelcy Warren. It was one of the top 10 most-expensive homes sold in Dallas that year.
The Lacertes bought their current Highland Park manse three years later, and today are building their “grandparent home,” which is just under 20,000 square feet on a 1-acre lot down the street. The dining room will have seating for more than 30 people to accommodate their large family—a big change from the couple’s first 3,000-square-foot home in California.
To say that life has exceeded their dreams is an understatement, Joyce says. Her husband agrees.
“There are a lot of people I know who work harder their whole lives than I have and without the success,” Lacerte says, summing things up. “It’s a combination of hard work, recognizing good ideas, luck—and timing. The harder I work, the luckier I get.”