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Larry Lacerte’s Fight For His Life

He runs a successful technology company—his second—while battling leukemia.
By Karen Nielsen |
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photography by Billy Surface

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.

Pragmatic Thinker
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.

Self-Made Man
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.”

Lucrative Deal
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.

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